- The Washington Times - Monday, March 30, 2009

Students are being forced to dig deeper into their bags of tricks to fund college educations as the struggling U.S. economy has claimed hundreds of thousands of jobs and ravaged countless families’ savings.

They are forced to borrow more, put four-year degrees on hold while they work, or even choose degree programs that aren’t what they necessarily want but one day may provide the means to pay off their education.

“Even families that have saved are facing dramatic losses in their college tuition plans,” Sheldon E. Steinbach said, noting a dive in markets that has slashed investments. Mr. Steinbach, a partner in the Washington law firm Dow Lohnes, has served for decades as the general counsel for the American Counsel on Education.

“There are many families out there who are changing plans. Students are staying at home, working, going to community college for their first couple of years then transferring to a four-year school” to lower their costs.

“It’s a very reasonable and acceptable way of going to college,” he said. “I think for many students, they are coming to terms with the fact that you don’t have to go to a school with all the bells and whistles.

“I think you will see more and more kids also transferring from the smaller private schools to the state public universities. Money is short and families have to make the determination as to how they are going to deal with this.”

Analysts say demand for student loans is higher than ever this year, but federal loans are still plentiful for those who need financial aid.

“Lots of schools are doing everything possible to increase financial aid this year and people are working hard on solutions, knowing that many families are going to have trouble,” said Sandy Baum, a professor of economics at Skidmore College and senior policy analyst for the College Board in New York.

Private financing to augment federal loans is tougher to find. The nation’s largest provider of private student loans, Sallie Mae, announced earlier this month a new model that will a smaller repayment over the long run but require some students to begin repayment while they are still in school.

Cautious private lenders will require a creditworthy co-signer on some student loans, she said.

“If you don’t have a parent who is creditworthy, you will have a harder time,” Ms. Baum said.

The Obama administration has proposed broad changes that would eliminate private banks from the federal student loan program. The president has argued that making loans directly from the Department of Education, rather than through private banks, would save the nation about $4 billion a year in subsidies.

Some students are finding innovative ways to meet the crunch.

In Muskegon, Mich., high school honors student Rachel Harris has taken to the Web to seek donations in an attempt to pay for tuition at her dream college, the University of Notre Dame, where she hopes to study biomolecular engineering.

Rachel is so intent on getting to Notre Dame that she’s advertising her worthiness at https://iwanttogotonotredame.com.

She hopes to defer some of the costs of the $46,000-per-year tuition at the vaunted Catholic university in South Bend, Ind. Her story, boasting her 3.97 grade point average and youthful determination to use the Internet to raise money, has been broadcast on Fox News and via other national media outlets.

Even if Rachel gets her loan for Notre Dame, she would face the same dilemma as many other students. Is it worth going into deep debt to finance a degree, particularly for programs such as medicine or law? And if you do borrow the money to follow your dream, will you find work that will allow you to pay it all back?

In New York, lawyer Robert Applebaum owes more than $96,000 in student loans. His personal rant on the Internet has turned into a Facebook group with 128,000 members, who support his idea of urging the federal government to spearhead college-loan forgiveness as a way to jump-start consumer spending, he said.

“I loved being a district attorney,” said Mr. Applebaum, 35, who worked in the Brooklyn district attorney’s office for five years after he graduated from Fordham University School of Law. “But I quit [to enter private practice] because I had to pay off my loans - I’d put them on hold for five years. Although I had great passion for my job, I just couldn’t pay off law school and also pay my rent. The only difference between Sallie Mae and Citibank and the mob is the cement shoes.”

Mr. Applebaum initially borrowed about $75,000 to complete law school, but deferment and compounding interest on his student loan pushed the amount he owes to more than $96,000.

He created a Facebook group in January, Cancel Student Loan Debt to Stimulate the Economy, where he makes a bold case that forgiving student loans would allow many successful people caught in the borrowing trap to spend again.

Little did he know that his own financial quandary would put him at the center of a growing movement, with more than 150,000 members and 2,500 new Facebook members joining his cause daily.

“I’ve somehow become the poster child for student loan reform. The student loan movement has now become my full-time job,” he said jokingly, but then turned serious.

“Student loan obligations are killing many hardworking middle-class people. Sometimes, nearly half their salaries go to student loan repayment,” Mr. Applebaum said. “There is nothing about my story that is unusual. But I fear these loans are discouraging students from going into public service and disincentivizing people from going into professions they love the most.

“If it wasn’t for my debt, I would still be in public service making a valuable contribution to society,” he said. “You put yourself in debt to do good, and then become a slave after graduating.”

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