In Grim Job Market, Student Loans Are a Costly Burden

They bought into the notion that if they went to college — never mind the debt — their degree would lead to a lucrative job. And repaying their student loans would never be a problem.

Skip to next paragraphBut the economic crisis has turned those assumptions on their ear as thousands of recent graduates have been unable to find jobs or are earning too little to cover the payments for loans that are sometimes as high as $50,000.

The result has been rising default rates for student loans. And unlike other debts, student loans cannot easily be renegotiated.

“You often hear the quote that you can’t put a price on ignorance,” said Ezra Kazee, who has $29,000 in student debt and has been unable to find a job since graduating from Winona State University in Minnesota last May. “But with the way higher education is going, ignorance is looking more and more affordable every day.”

About two-thirds of the students graduating from college next month, or an estimated 1.8 million, have taken on student loans to pay ever-rising tuition and room and board. The average cumulative debt among graduating seniors is about $22,500, according to FinAid.org, a Web site that specializes in financial aid.

Mark Kantrowitz, publisher of FastWeb.com and FinAid.org, recommends that students follow a simple rule of thumb. “Do not borrow more than your expected starting salary for your entire undergraduate education,” he said. “If your starting salary is going to be $40,000, then you should borrow no more than $10,000 a year for a four-year degree.”

Gregory Westby, a 27-year-old designer who graduated from the School of Visual Arts in New York last May, is caught in the student loan trap. He has $150,000 in debt. He hasn’t been able to find a full-time job in graphic or set design, but is using his earnings from low-paying freelance jobs and working weekends at a fitness club to pay his rent. And he’s in the process of deferring his loans, which, together, cost $1,500 a month.

“Right now I’m surviving, but who knows when I’ll be able to start paying my loans back?” he said.

The New York Times Global