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Diplomas, hugs - and a mountain of debt

Grads face tough choices as they enter a tight job market with record levels of loans to repay.

By Craig Savoye Special to The Christian Science Monitor / May 29, 2001



John Dolan has been on a fast track for most of his 21 years. A newly minted graduate, with honors, from prestigious Swarthmore College, he has been ranked fourth nationally as a debater, served on the sport's national board of trustees, speaks fluent Chinese, and has considerable summer work experience.

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But right now he's thinking about debt, not debate. His concern is mounting over paying back his loans, and the rejection letters keep piling up. Seven companies, five law schools, and a fellowship program have already told him "no."

"Had I graduated two years earlier, I think I would have been in a much more favorable situation," he says. "I had friends who were having offers thrown at them."

Mr. Dolan has taken a job at a summer camp and is retooling his job-hunting strategy, but he acknowledges he may have to go back home to live if he doesn't find a permanent job. "It's not like I'll end up in a gutter somewhere. At the same time,... I'm definitely having a readjustment of expectations."

Many graduates are having similar harsh landings this month, going from the elation of commencement ceremonies to the realities of financial obligations. Not only are they facing one of the toughest job markets in years, but the college debt burden has reached record levels - typically $14,000 to $16,000 for bachelor's degree recipients, up to well over $20,000 for graduate students, estimates Jerry Davis, vice president for research at the Lumina Foundation for Education in Indianapolis.

The level of debt is rising each year. Howard Greene, founder of Greenes' Guides and a 32-year consultant in educational planning, notes that the financial-aid packages colleges offered used to be mostly grant money. They eventually shifted to include more work study, and now their biggest component is loans. "So the average debt of students graduating from college has become just horrendous. It's a very frightening trend - that's the only word to use."

Rising loans, falling economy

Although the student-loan burden has been rising steadily rather than dramatically over the past few years, its impact has been largely neutralized by a surging job market. Now that the economy is slowing and starting salaries are ebbing, the unbridled optimism of late '90s graduates has been replaced by late-night sessions with debit sheet and calculator.

"Students are coming to me more and more to talk about paying off student loans," says Jason Simon, a student adviser at University of California-Berkeley.

Some graduates are refusing to let their debt dictate their plans, but others are foregoing internships, social service, or immediate entrance into graduate school in order to make money and repay college loans.

Take Alex Cho, who graduated this month from Pomona College in Claremont, Calif., with a degree in media studies and well over $10,000 of debt. He considered taking an unpaid internship in Hollywood as a means of getting his foot in the door of the entertainment industry, but he rejected that notion, as well as immediate entrance into graduate school, because of his loans.

Instead, he plans to teach elementary school for a couple of years to help pay down his debt. He'll formulate his long-range career plans after that.

Not the career of choice

"I worry about the debt. On the other hand, I worry just as much about not having a well-defined career goal as of yet," he says. "A lot of my friends - even the ones who were recruited on campus and took jobs with good companies - are in the same position. They don't want to be with those companies the rest of their lives."

To be sure, the debt burden may ease in coming years with the tax cut Congress approved Saturday. The cut includes enhanced student-loan interest deductions and other perks to help with college costs.

And some grads are forging ahead with non-lucrative plans despite their debt. Jodi Lane of Fort Collins, Colo., is graduating this spring with a masters in architecture from the University of Texas in Austin - and a staggering $50,000 in loans. Dedicated to public service, she is leading a team of students who are designing and building an orphanage in Kenya.

Idealism isn't dead yet

She plans to work part-time on that project over the next year - construction is expected to begin next summer - while also journeying to the Ukraine to sketch some buildings there for a historical preservation effort. She'd also like to establish a pro bono division in an existing architectural firm and hopes to eventually start a nonprofit organization that offers architectural services to other nonprofits. None of her plans give much consideration to money-making.

According to rough guidelines that college-loan specialists use to advise students (which suggest they earn at least $17,500 per $10,000 of debt), Ms. Lane should look for a salary of more than $87,000 to start repaying her loans. But for now, she's not budging from her ideals.

"There were points every semester where I'd get very nervous about the loan situation," she says. "But there was always someone who encouraged me to move forward and get my masters degree and worry about paying off the debt when I got out of school. Now that I'm out of school, I find I'm not any more or less concerned. I know it will all work itself out."

Likewise, recent Swarthmore grad and would-be law student Dolan is keeping a positive attitude toward his so-far unsuccessful job search. He recalls a friend telling him, "When you're 65, John, nobody says, 'gee, I wish I had been a lawyer for another year.' That helps me keep things in perspective."

(c) Copyright 2001. The Christian Science Monitor