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By Hadley Nesbitt September 05. 2015 12:01AM Guest Opinion: The lure of student loans: how to avoid insufferable debt Betty Kazmin’s thoughtful guest opinion (Aug. 25) on the burden of student loans, ends with the prescription “America needs to ... make higher education affordable to all who are committed to achieving their goals.” In the current marketplace, this simply will not happen. Individual Americans need to face the fact that higher education functions as a market. The sellers are the colleges and universities. The buyers are students and parents. Lurking in the checkout line is a third party, government. As an education consumer, government has been driving up the market for more than 50 years, shoveling in so many billions of dollars that colleges and universities have thrived while raising prices at three times the rate of inflation. In Oregon alone, according to the College Board, the public four-year universities’ 2014-15 in-state tuition and fees, adjusted for inflation, were 17 percent higher than just five years earlier. You don’t need a PhD in economics to know that such price-hiking can be traced to the infusion of federal and state dollars. The siren song of loans is the guarantee that you can learn now and pay later. You’ll slam into that rocky coast of crushing debt only after you leave college. Imagine a $50,000 limit on a VISA card where your first payment can be put off for four and a half years. (If your student loan is in the category of “subsidized,” at least you won’t be charged interest while in college.) Student aid is a mix of scholarships, grants, loans and work-study programs. But only the loan segment — direct government loans as well as guaranteed ones from private lenders — has grown to become the virtual elephant in the room. Ms. Kazmin summed up the predicament. Six-digit debts for new doctors and lawyers. Among undergraduates, reaching the Stafford Loan maximum of $57,500 is commonplace. U.S. student loan debt exceeds $1.2 trillion. Over 7 million debtors are now in default. The reality hits like a ton of bricks when the first payment comes due six months after graduation — this at a time in young lives when fledgling budgets are coping with high rent, a new car, and in many cases, a marriage. Students about to enter college — as well as parents — need to take a hard look at career prospects before committing to a loan contract. A careful thought process should precede the acceptance of any offer, and should be repeated each year before enrollment: Career choice. Undertake a simple cost-benefit analysis. The Occupational Outlook Handbook describes prospects in nearly 900 occupations: www.bls.gov/ooh/ . A random look at median salaries for job titles beginning with “A” shows announcers (radio & TV) earning $28,020, architects, $73,090, and athletic trainers, $42,690. While eventual success in any field is uncertain, consider the employment picture before rolling the dice on a big loan. College choice. Public or private? Residential or commuting? Four-year or two-year? These all affect cost. Many two-year programs lead to immediate jobs with surprisingly high entry-level pay. More expensive institutions will promise to fill the gap between what you can afford and the total bill, tempting you with a financial aid “package.” Expect it to be top-heavy with loans. You can lower the loan amount by offering to pay a higher portion of the bill than the minimum contribution required under the rigid federal rules for calculating need. Undergraduate years. Not long ago I accompanied a grandson on a tour of a large university. The admissions officer proudly informed us that students there were commonly taking five years to graduate , thereby “gaining maturity for the next big step.” She failed to mention that the fifth year would add 25 percent to the four-year price tag. A prospective freshman would be better off taking a “gap year” right after high school, while saving money toward a well-planned four-year curriculum. One year at a time. Say you want to be a petroleum engineer, one of the highest paying technical jobs (median salary $130,280). You get admitted to engineering school, signing on for a maximum $5,500 loan for the first year. But you soon “hit the wall” in your freshman calculus class. You enjoy an elective psychology class and decide to switch majors. Given the hiring prospects for a bachelor’s degree in psychology, you should think twice before taking on a similar loan for your sophomore year. The entire approach requires a cautious, common-sense attitude toward debt. Responsibility is paramount — not only in paying off debt, but in assuming it in the first place. Hadley Nesbitt of Medford managed programs for Educational Testing Service in the areas of standardized tests and financial-need analysis.   http://www.mailtribune.com/article/20150905/OPINION/150909828 © 2015 Copyright © 1995-2011 Crain Communications Inc. All Rights Reserved. Terms of Use Privacy Statement -->