With the worst recession since World War II, people entering and exiting college face problems that no other generation dealt with. Crushing loads of debt from increasing tuition and an inert job market threaten the financial futures of young people before their professional lives even begin.
Tuition is certainly cheaper when students stay in their home state for higher education. However, with costs rising beyond the rate of inflation, it has become nearly impossible for someone to pursue a degree without financial aid. Loans have become the primary instrument available to students fund their education.
"It's definitely worrisome," said Ian Conner, a freshman electrical engineering major. "It's one of the reasons I chose to stay in-state, the tuition is cheaper, I'm just not sure what's going to happen when I graduate."
According to a Wall Street Journal report in August, student loan debt has been accumulating at an alarming rate, where Americans now owe more student loan debt than credit card debt, totaling nearly $849 billion dollars in student debt.
"With debt accumulating and rising healthcare costs, I feel that the middle class is shrinking and on the verge of disappearing," said Demarice Mealo, a junior legal studies major. "All [of] these issues, either with healthcare or the recession or Wall Street, it's all interrelated."
With the passing of the Bankruptcy Abuse Prevention and Consumer Protection Act in 2005, student loans cannot be wiped out in bankruptcy protection filings in any chapter. The amount of loans taken out by a student must be repaid unless they can demonstrate "undue hardship" to the bankruptcy court.
Undergraduate students are required to undergo loan entrance counseling, but are still unaware of the numerous, yet still important caveats of taking out student loans.
"We always hear about the public debt, but there has been a growing concern for quite some time over private debt, such as credit cards and student loans," said Dr. Isaac Ehrlich, chair of UB's Department of Economics.
Ehrlich remains cautious but optimistic that debt is still manageable for individuals and may be worthwhile after all.
"There's no magic formula obviously, but for the amount of debt taken, there's actually not a high rate of failure compared to other loans," Ehrlich said. "However, one worthwhile fact is the growing disparity of college versus none; the rate of return of human capital, and that the opportunity cost, meaning on how one best chooses to spend their time higher education is worthwhile."
According to the Bureau of Labor Statistics in 2009, people in the labor force with at least a bachelor's degree have median weekly earnings nearly a third more than those without a degree at all.
Debt is only part of the equation for students who have completed their post-secondary studies. Students must eventually find a career to pay their loans in full. However, unemployment levels remain near double digits, with the rate at 9.6 percent in Aug. 2010,according to the Department of Labor statistics.
Additionally, according to the U.S. Commerce Department, incomes plummeted in 2009 by nearly 1.8 percent on average.
"Even without crushing debt, I'm still really troubled," said Jacob Deutsch, a sophomore aerospace and mechanical engineering major. "I'm just trying to secure my career in any way possible, looking for internships, paid or not. It's all you really can do."
Many students on campus are even reluctant to start investing in anything more than savings accounts, which cost little to maintain whereas stocks and mutual funds usually demand fees from a money manager or stockbroker.
"It's just not worth it to me right now, I'd rather go toward something safer like a 401k, than stocks in this economy," Deutsch said.
Other UB students haven't even begun thinking about investment after college.
"It's just not in my priorities right now, I have way too much going on to be so focused on that," said Judy Mai, a sophomore occupational therapy major. "Sometimes all that stuff is just too much to process."
Safety and security are, in fact, the growing trend in financial institutions since the recession began in 2008. With federal regulations increasing the private equity requirements that banks need to make loans, they have been hesitant to grant other types of loans such as mortgages and home equity borrowing.
"Treasuries are, in fact good," Ehrlich said. "They're in high demand currently for their safety and hedges against inflation, savings accounts in the long run with the pitiful interests rates—they just don't move."
While many undergraduate students nearing graduation feel stressed and confused by personal finance issues, students should see that these issues should be considered before graduation to ensure less debt and more financial strength for graduating students.
