College costs have soared in the past decade, rising much faster than inflation. The result: More students borrow – so much so that cumulative student loan debt now tops $1 trillion, more than Americans owe on credit cards. Some grads pay $700 or more a month. How do they swing it?
Graduated from Carnegie Mellon University in 2012
Amount owed: $191,000
When Aaron Marks was applying to colleges, he knew his parents couldn’t help him, but their income disqualified him for financial aid. In the end, Mr. Marks’s father, who runs a motorcycle dealership, took out most of the federal loans for his son.
But having the loans in his father’s name limits Marks’s options to reduce his payments if he’s ever out of work or to qualify for an income-based repayment program. Under the terms of the 30-year repayment program, Marks owes $1,300 a month – and that number will only get bigger over time.
“It’s very stressful,” he says. “I got myself into this situation; I made the decision to go to an elite school and took out loans.... But I think it’s good for people to be aware that you don’t think about how much it will add up.”
Marks, who studied business, took six years to graduate because he was working on an entrepreneurial venture. He is graduating with a good job, but his loans greatly influenced the sorts of jobs he considered.
He loved his years at Carnegie Mellon, but in hindsight he wonders whether his business degree will put him at enough of an advantage to justify all that debt.
“I kind of knew what was going on,” he says about his decision to borrow so much money. “But you don’t really think about what it actually means to have a house worth of debt, on a higher interest rate than a mortgage, until you’re getting close to graduating and thinking about having to repay them.”