In recent posts we introduced you to Jason and his friends and the student loan problems they all have. Jason and two of his friends, Terrell and Kate, are seniors in college, just months away from graduation. Olivia is a junior. We focused on Jason and told you something of his loans.
To summarize, Jason has taken five years to get to graduation and has borrowed the maximum amount of federal student loans, a total of $31,000. Because no more than $23,000 in subsidized loans is permitted, the remaining $8,000 in federal loans is unsubsidized. Jason also has two private loans totaling $15,000 which his uncle cosigned. Jason’s first payment on his federal loans is not due until six months after graduation but his first private student loan payment is due 60 days after graduation.
Another factor is that Jason has not received a job offer, although he has been interviewing with various corporations for jobs in human resources. The average starting salary in human resources is $53,000. The rule of thumb is not to borrow more than your anticipated first year salary. Therefore, Jason should be able to repay his loans without difficulty, even with the accrued interest added to his loan total. But he’s going to have to upgrade his job search now.
A look back often helps us to see forward more clearly. So, let’s take a look at what contributed to Jason being where he is now.
Jason and his sister were raised by their mother after his father became gravely ill and died a short time later. Jason was just nine years old and his sister two. Jason’s mother had to work full-time and eventually earn enough money to keep the family together. In fact, she had done well enough that Jason was not eligible for a Pell grant when he applied for financial aid to college. (Students whose total family income is $50,000 a year or less qualify.)
During high school, Jason had taken a mix of business and machine shop courses as well as college prep courses in English, math and science, but he was not interested in school and graduated with just a little better than a C average. Nevertheless, along with his group of friends, he assumed he would go to college. He attended a less selective college among his state’s several regional colleges where he changed his major after freshman year to psychology and then to physical therapy. He will graduate with a GPA similar to his high school average.
Jason is not unlike many students. And like many students, his decision to attend college was made without considering any alternatives. Upon entering college, his goal was unclear and he changed majors twice. This extended his time to graduation, costing him another year of college as well as the lost income he would have earned if he had graduated on time. Additionally, this required borrowing more money for school and more time during which interest continues to accrue.
Your homework is the following:
- review our previous four blog posts about Jason and student loans:
- reread this post carefully; and
- make up a list of things Jason might have done to change the outcome.
In our next post about Jason, we’ll discuss some of the ideas you suggest and some you might have missed.