U.S. Secretary of Education Betsy DeVos called student loan debt a “crisis” Tuesday, prompting questions of how the issue affects students at Boston University.
BU economics professor Laurence Kotlikoff said struggling to repay student loans can have significant negative effects on people’s lives, possibly preventing them from purchasing health insurance or raising families.
“A lot of kids are leaving schools, including BU, with a lot more debt than they should,” Kotlikoff said, “and they can’t afford to repay, and they can’t get out from under it.”
In a personal finance class he taught last spring, he asked students if they had student loans. One student raised their hand and started crying because they had over $100,000 dollars in student loans and could not get a job.
Kotlikoff said that he is appalled when he looks at student loan rates and likened it to predatory lending.
“Anybody who’s making a loan, whether it’s a bank, the government or a university, should be taking people through understanding what people’s capacity to pay back that loan is, and if it’s insufficient, they shouldn’t be given the loan,” Kotlikoff said.
He said students and parents also have a responsibility to make an informed decision when deciding whether to take out a loan.
“Young people just are not aware of the implications of what it means to have to pay back $100,000 dollars,” Kotlikoff said.
BU spokesperson Colin Riley said he believes parents and students should be aware of what they are committing to when they take out a loan.
“We understand the seriousness of investing, the seriousness of borrowing to enroll in schools, and we want everyone, parents and students alike, to be open and clear-eyed about what that entails and have conversations, ask questions about it,” Riley said.
Angelina Debbas, a freshman in the College of Arts and Sciences, said she thinks BU’s high tuition makes student loan debt a prevalent problem at the university.
“I think that one part of student loan debt is linked to the fact that not a lot of people can come to BU because it’s so expensive, and for the people that do come to BU, they’re left paying a lot more after they leave school,” Debbas said.
CAS freshman Marina Berardino said the scholarship money she received from BU is not enough to cover tuition, so her family decided to take out loans worth tens of thousands of dollars for every year she attends. This makes the prospect of graduation, she said, and possibly going to graduate school, a scary concept.
“It’s stressful because you should be focusing on school, but you’re also focusing on money,” Berardino said.
Alvaro Gaytan De Ayala, a sophomore in the Questrom School of Business who has taken out student loans, said he finds it hard to keep track of when payments are due in order to avoid fines associated with late payments.
“You have to be on top of it, because if you’re not, then you’re going to have to pay extra,” he said. “It’s already hard to pay what you have to pay, and then they make you pay more.”
Riley said students and parents may view student loans as an investment in the student’s future.
Auxiliary benefits of getting a college education, Riley said, include studying subjects a student would not have otherwise studied, meeting people from different cultures and developing the discipline it takes to earn a college degree.
Riley said the question of whether a loan is manageable is also important to consider. BU’s low default rate is low in comparison to the national average, which Riley said reflects well on students’ and families’ borrowing decisions. BU’s default rate is 1.3 percent, compared to a national average of 11.5 percent.
“Obviously there may be individuals where that is not the case, but by and large, they do make good decisions,” Riley said.
Riley said the university’s low default rate also indicates that students are receiving a valuable education.
“The graduation rate is high, and students are completing their degrees and going on and into careers that are enabling them to repay their loans satisfactorily,” Riley said.
Mandie Kelleher, a graduate student in the Metropolitan College who also completed her undergraduate studies at BU, said her student loans from BU have limited her job opportunities.
She said she feels the need to take her current job as a payroll and time administrator at BU, which is unrelated to her preferred field of education, because it was the only way she would be able to pay her student loans.
“I literally could not afford to live if I did not have a full-time, better-than-average-paying job,” Kelleher said, “even keeping things pretty tight with my budget.”
Riley said he is thankful the government is not ignoring the issue.
“Let’s hope that that continues to be in front of mind of legislators, and anything the colleges and universities can do, we’ll continue to do,” said Riley. “Certainly, Boston University is.”
Kiran Galani contributed reporting.