Student loans spell trouble for those without the high price firm jobs

I may write a longer article on this at some near point in the future, but the gist of it can be begun here. The AP, today, released a rather disturbing article about the student loan rates and loan problems for graduate students generally. See High Priced Student Loans Spell Trouble. For disclosure purposes, I first saw this on the Yahoo news wire, under the title Explosion in High-Priced Student Loans Sow Seeds of Trouble for U.S. Economic Growth but since Yahoo news links expire after a few days, I am providing two more permanent links instead. Either way, the article focuses primarily on law school debt, but it rings true for both the legal and medical professions (who chose not to participate in the military's Health Profession Scholarship Program). Graduate school debt is steep and the financial value a professional is given for this academic and career pursuit is, for the vast majority, minimal. Since my background is obviously legal, I will focus on that side of it with complete acknowledgment that my medical school counterparts are in the same boat.

As I have constantly written about, most of those who graduate from law school are in a financial nightmare. The top 1-2% in the country, regardless of tier, are the ones securing the jobs at BigFirms. The rest, unfortunately, are scraping for jobs which pay, on average, $40-50k/year. Although I quietly defer to the fact that this clerkship will likely lead me to a much higher paying job, for the time being, I am in the same boat as most everyone else. Like most of my colleagues, I have about $85-90k in debt. With my grace period quickly coming to a halt, my interest payments are figured to be about $600/month (mainly because I consolidated my first two years' government loans with the 4.7% interest rate). So, with the current rates in flux, it is unclear exactly how much my monthly payments will change, but I figure that $600 in interest will be pretty steady. Add in rent, utilities, and food, and that leaves very little at the end of the month to save for much more, such as a house. I can't be the only law clerk who thinks about these things, or blogger, and I know I'm not the only law school graduate.

More disturbingly, however, is how this level of debt is having a major impact on public service. This, I submit, is the bigger problem. The federal Stafford loans cover less than half of tuition, except for perhaps a couple of public schools. So, not only do you have to borrow $18,500 a year from the federal government, most of us are forced to borrow at least an additional $20k from private loans (namely, Citibank). And I'm not even going to touch the private loan scandals that are rocking the nation right now. Tuition is a mess.

Congress, at least, is attempting to try and help the problem, but an extra couple thousand isn't even going to put a dent in the debt percentage (although I certainly appreciate the effort). I think the time has come for the states to step up and create their own Stafford program. The cost is going to be high up front and is going to have to come from somewhere, but its necessity will only become more glaring in the next few years. Maybe states could model it after the military grants where if you agree to work in public service, they will forgive some of your debt. This, too, has problems with equality, but I think these are secondary to the larger issue. Obviously I have more to say about this issue, but I'm going to have to hold off until football season is over. Go Cowboys!

Tags: student loan problems, paying student loans, law school debt