Jun 22, 2009 7:39 pm US/Eastern
Debt Opens Scary World For College Students
NEW YORK (CBS) ―
Travis Shiverdecker hopes he's on the fast track to success. He's armed with a brand new master's degree in architecture and he's eager to get started.
"My 10-year goal is to have my own firm doing interior architecture, interior design, graphic design and product design," he says.
But he's already in the hole with $170,000 in student loan debt. Then there's the shrinking job market as well.
"It's pretty bad. Honestly, I don't know how I am going to pay it back," he says.
Shiverdecker will be 44-years-old before he pays off his debt, making him a child of the recession.
Over the past 25 years, the median family income has risen 147 percent, but that number has been eclipsed by a 439 percent increase in tuition and fees at colleges across the nation, according to the National Center for Public Policy and Higher Education.
Unfortunately for students, unlike credit cards, car loans and gambling debts, student loans can not be discharged through bankruptcy.
Bankruptcy attorney David Shaev says many students aren't prepared for the big decisions that they face when college comes their way.
"They're going into college at 17 and 18 years of age. They're really not able to make these financial decisions," Shaev says. "We're setting our students up for a lifetime of bad finances."
This debt often leads an increasing number of young people just a few years out of college to pay attorneys anywhere from $1,500 to $4,500 just to go into bankruptcy.
"To have them pay something back for a period of up to five years, it basically holds off the dogs for five years and at the end of five years, we put them back in bankruptcy," Shaev says.
Shiverdecker and many of his college friends are now facing a lesson in hard knocks much sooner than they ever expected.
"I really don't know what to expect and it's scary," Shiverdecker says.
Students may be getting a bit of a lifeline as of July 1 when a new income-based repayment program, but it only applies to government-based loans, not private loans.
For more information, see the following resources:
Loan Forgiveness - William D. Ford Direct Loan Program
Federal Direct Consolidation Loans
There are new federal guidelines taking effect July 1 for student loan repayment. For more information, check out a story from the Committee on Education and Labor
here.
(© MMX, CBS Broadcasting Inc. All Rights Reserved.)
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