Advisers Struggle to Manage Rise in College Debt

Career College Central summary:

  • When Ian Aquilino, 23, graduated from Penn State University last year, he kicked off what's become a rite of passage for many of today's youth: chipping away at his student loan debts. The New York-based actuarial assistant wrapped up his college education with some $42,000 in student loan debt — the sum total of a variety of loans, including a private loan with a variable rate that's now at 8.5%. About 20% of his net pay — $500 a month — goes toward servicing these debts, which he's managed to reduce to about $34,000.
  • Mr. Aquilino said the debts were necessary to launch his career. “I come from a lower-middle-class family that didn't have any savings,” he said, noting that he's a first-generation college student. “My parents didn't understand the cost, and we did not have a lot of money when I was growing up.”
  • The private loan, his most costly obligation, began with a rate of 6%, which Mr. Aquilino admits “wasn't great, but I had no choice.” The lion's share of his net pay goes toward paying his rent and servicing his debt. He even makes extra payments to cut the principal amount. Though Mr. Aquilino participates in his company's 401(k) plan and receives a matching contribution, the outlay related to paying the debt is deterring him from socking away more.
  • “If I didn't have these loans, I'd have extra money to save for the purchase of my first home,” Mr. Aquilino said. “I wouldn't be buying right now, but when I do, it's going to be very expensive, and the down payment is a large sum.”
  • He is not alone. As the cost of higher education escalates beyond the realm of the reasonable, millions of young Americans find themselves with too much debt. Under such a crushing load, many are forced to put off buying homes and achieving other milestones of adult life. Oppressive debt also jeopardizes their ability to prepare for their own retirement.

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