WASHINGTON (FinalCall.com) – Michael Stevenson left for college five years ago with big dreams and high hopes. Since graduating last year his dreams have been deferred because he can’t find a job in his field and his high hopes have been replaced with high student loan debt.
“No job and bill collectors was not part of the plan,” he told The Final Call. “I have a college degree and can’t find a job. I’m about to get a Christmas job with the hope that they keep me year around. I need the money.”
Mr. Stevenson’s story is becoming more common. College seniors who graduated in 2009 carried an average of $24,000 in student loan debt, up 6 percent from the previous year. Meanwhile, unemployment for recent college graduates climbed from 5.8 percent in 2008 to 8.7 percent in 2009–the highest annual rate on record for college graduates aged 20 to 24.
The Project on Student Debt’s new report, “Student Debt and the Class of 2009,” analyzed the average debt levels for the 50 states and District of Columbia and more than 1,000 public and private non-profit four year U.S. colleges and universities.
Students in the District of Columbia and New Hampshire graduated with the highest average debt levels: $30,033 and $29,443, respectively. Those in Utah and Georgia had the lowest average debt: $12,860 and $16,568 respectively.
Add high unemployment and high debt, the result is high loan default rates.
In September, the Department of Education released new data showing that the national “cohort default rate” on federal student loans is 7.0 percent for borrowers who entered repayment in 2008, up from 6.7 percent last year. The data released measures the share of each college’s federal student loan borrowers who default within the first two years of repayment.
Since it takes at least nine months of non-payment to default, these are people who are unable to make their loan payments very soon after leaving school. The consequences of default for students are severe and long-lasting.
The resulting debt can follow borrowers for the rest of their lives, subjecting them to harassment by collection agencies, ruining their credit, making it difficult to buy a car or a home, limiting their job prospects, and making it impossible to get federal grants or loans to return to school. Colleges with high cohort default rates may lose the ability to offer federal grants and loans to their students.
“These new data underscore the urgent need for the Obama administration to adopt and enforce regulations to curb career education practices that leave students deep in debt they cannot repay,” said Debbie Cochrane, program director at the Institute for College Access & Success.