This Bright-Eyed Young Man Was Utterly Demolished by Student Loans
www.defaultmovie.comEven as total outstanding student debt rises to $1 trillion, lawmakers have yet to allow loans to be discharged in bankruptcy.
Without an escape clause, these loans can strangle a person.
Take 36-year-old Nick Keith, who remains $142,000 in debt eight years after graduating from culinary school. He’s featured in a new film, “Default: The Student Loan Documentary,” in which several college graduates expose the pitfalls of the private student loan industry.
“I want to educate the public about the facts,” Keith said. “My life has become a daily swim in a tar pit with very little hope of ever getting out.”
Without family support, Keith turned to culinary school
Keith’s father only agreed to co-sign a student loan if he stuck with an engineering degree at Iowa State University, but even with decent grades, he knew it wasn’t a right fit.
He dropped out sophomore year and later turned to the California Culinary Academy–without his dad as a safety net–hoping to put his love for healthy eating to use.
“The culinary academy commercials were on the Food Network every 15 minutes,” he said, and only required 12 months of study with a three month externship.
He fell for their sales pitch, hook line and sinker
“I should have seen all the signs. [The campus tour guide] had a used car salesman answer for everything,” Keith recalls.
The magic number was always 99 percent–whether Keith asked how many enrolled students graduated or how many graduates scored jobs afterward.
Feeling confident, Keith took out $46,000 in private loans
If you or your child plans to attend a four-year college or university, chances are you’ll have to take out a loan to do it. The Project on Student Debt, a student debt research nonprofit, reports that 67 percent of students attending four-year schools turn the tassel with debt, the average of which is $25,250.
Mary Harper, director of student financial assistance for the University of Southern Indiana in Evansville and head of the school’s Eaglenomics financial literacy program, says students can prevent the debt from becoming a problem by taking a few simple steps. Here’s how to ensure you’ll be able to pay back student loans after graduation.
Reduce the borrowing
Every dollar students borrow, whether from student loans or by credit card, will cost them, says Harper. While students can’t control the price of tuition or how much they receive in financial aid, they can minimize spending on amenities such as food, entertainment and transportation.
“You cannot file bankruptcy on federal (student) loans at this point. It’s just wise to teach students to be careful with planning and to manage debt while they’re in school,” she says.
That means educating underclassmen about the perils of credit card debt before they make unnecessary charges and informing upperclassmen about creating and maintaining a budget. Harper adds that students can also reduce debt by getting a part-time job while in school and making payments to the institution instead of borrowing.
“We are not recommending that our students work more than 20 hours a week,” she says.
Research by the nonprofit think tank Public Agenda shows that balancing school and too many hours of work is the No. 1 reason students drop out of college.