Payback Time
opular culture has nick-
named the current crop
of 20-somethings Gener-
ation X, like the un-
known numerical
quantity in an algebra
equation. U.S. News and
World Reports' 1994 col-
lege issue nicknamed
this group of emerging col-
lege grads Generation S — for
stressed.
Whatever the nickname, the
current crop of more than 1
million American men and
women who have recently grad-
uated from U.S. colleges and
universities are learning some
of life's harsher lessons, namely
that financial success in today's
career world is predicated
on a different formula than the
making payments on his school
loans.
According to figures from
WSU's office of scholarships and
financial aid, 550 of its law stu-
dents are currently receiving fi-
nancial aid. The average debt is
about $25,000 at graduation.
"It's the fear of the unknown
for me right now," Mr. Operer
says. "I know the extent of my
debt, but it's hard to comprehend
it, kind of like the U.S. Govern-
ment's debt. It's trillions, but how
can anyone understand it?" he
says.
Mr. Operer knows that luck
and merit have worked in his fa-
vor. He landed a job with a large
law firm before he graduated.
"There are many people out
there who are well-qualified who
colleges to hike tuition fees with-
out worrying about losing stu-
dents.
Public university costs jumped
by 153 percent between 1981 and
1994, according to a report by the
College Board, a research group.
Private university costs rose by
203 percent during that same
time period.
Bringing these statistics clos-
er to home, depending on the
school, between 31 and 55 per-
cent of the undergraduates at-
tending Michigan's public
universities receive financial
aid.
Judy Florian, director of
WSU's office of scholarship and
financial aid says 85 percent of
the school's medical students re-
ceive financial aid, with the av-
Paying off school loans while
trying to earn a living is the
rule, not the exception.
LINDA BENSON SPECIAL TO THE JEWISH NEWS
one that worked for their par-
ents.
It includes finding a job that
pays a decent salary in an ever-
tightening, highly competitive job
market and yet another ingredi-
ent — paying off financial loans
and grants which have subsi-
dized the spiraling costs of earn-
ing that college degree in the first
place.
What is more, the government-
subsidized financial loans and
grants which have seemed so at-
tractively available to college stu-
dents for the past two decades are
probably going to add greater
burdens to these young shoulders
in the future.
For Josh Operer, 25, and a
1995 Wayne State University
Law School graduate, the mo-
ment of truth will come in the fall
when he starts working at a De-
troit-area law firm and also starts
have not (found a job)," he
says.
Data from the Bureau
of Labor Statistics indi-
cates that of the 1.1 million stu-
dents who graduated in 1993, 6.1
percent were still unemployed
one year later and 23 percent
were working in jobs that did not
require a college degree.
Access to higher education has
changed over the past 50 years
from a privilege for the few to a
necessity, a trend that has re-
ceived the blessing and the par-
ticipation of the federal
government.
Congress has been encourag-
ing educational opportunity by
allocating direct financial aid to
students since 1944, when it
passed the GI Bill to help World
War II veterans get college de-
grees. The commitment expand-
ed in the 1970s and 1980s and
has grown into an appropriation
of $32 billion, spread around in a
plethora of financial aid. Ex-
panded loan programs enabled
erage debt of $50,000 at
graduation.
Now, as political pressure
builds to balance the budget by
2002 and Congress looks for fat
to trim, these college loan pro-
grams have come under closer
scrutiny. Last month, the U.S.
Senate and House of Represen-
tatives both approved resolutions
that propose budget cuts of be-
tween $4 billion and $13 billion
in college financial-aid programs
over the next seven years.
One program which is in se-
rious peril is the Direct Stafford
Loan, in which the federal gov-
ernment picks up the interest
charges on a student loan until
graduation.
This trend has financial aid of-
ficers in colleges throughout the
country worried.
One of the best kept secrets in
the Detroit area is the Educa-
tional Loan Service under the
auspices of Jewish Vocational
Service and Hebrew Free Loan
Association.
"These loans are interest-free
funded by more than 40 schol
arship funds managed by the
Jewish Federation," says
Marvin Berman, JVS loan coor -
dinator. "Our loans are usually
a last resort, after government
loans, parental aid and scholar-
ships."
In 1994, JVS processed about
200 loan applications averaging
$2,000 to $3,000 per loan.
Sharon Vaughters, associate
director of department relations
for career placement and plan-
ning at U-M sees inconsistencies
in today's job scene, but notes
that most young people are con-
ditioned for it.
She says business and the
business end of the sciences are
offering the best financial
prospects to undergrads right
now and were the most active
recruiters at U-M this year.
Still, many students buck the
trends and choose their own
path: for example, U-M's
school of social work, where
applications have been in-
creasing over the last two
years despite the profession's
current reputation for low
salaries.
"There is a change in atti-
tude among this generation to-
ward work and the strategies for
going about finding it," she says.
"Young people these days know
they can anticipate three differ-
ent careers and about 15 differ-
ent jobs. We tell them it's
important to look for a niche and
have some geographic flexibili-
ty."
Michael Benedek, a senior vice
president and financial consul-
tant for Smith Barney Inc. in
Southfield, offers some addition-
al strategies to new graduates
who need to learn the coping
skills for managing debt.
"Don't buy a new car," he says.
"Stick with the one you have for
a while. If possible, live at home.
If you plan to relocate, try to
have at least one roommate. Al-
locate at least 15 to 20 percent
of your take-home salary to re-
payment of the loan. Pay rais-
es should be earmarked to repay
the loan, too," says Mr. Benedek,
53, who financed his own edu-
cation at Eastern Michigan in
the early 1960s by selling shoes
at Northland. "Live as frugally
as you can while in debt. The ob-
J ective is to get out as soon as
possible." ❑
SEE RELATED STORY page 32