Dozens of all-nighters. Hundreds of tests. Thousands of pages written. Days gone by without showering because there just isn’t time. More sleep deprivation-related illnesses than have been diagnosed.

Finally — thankfully — it all comes to an end.

After years of strenuous learning, nothing can put a damper on graduation. That is, except debt.

Megan Kenny, a fifth-year senior in the College of Nursing, will graduate this May with $86,000 in loans. That’s more than three times the median amount of debt of a Marquette graduate in 2009. Half of these loans are private loans, which often have higher interest rates and fees than federal or state loans.

Each year when Kenny took out a small loan, she said it didn’t look that bad. But now the total number is staring back at her.

Kenny can’t help but wonder if there’s something she could have done to borrow less.

But she did all she could.

Kenny worked during summers and had campus jobs. For three-and-a-half years, she even had her room and board paid by the Office of Residence Life by working as a resident assistant and facility manager.

Sound familiar?

The graduating class of 2010 will have paid $105,644 in tuition and fees over four years at Marquette. If graduates borrowed federal loans, they’ll have a six to nine month grace period before they must begin repayment.  If they’ve borrowed private loans, they may have to start paying them back immediately.

As soon as graduates have their diplomas in hand, they enter the real world — in the red.

[youtube]U0yuwM1f9AM[/youtube]

Student loans: Not such ‘charitable gifts’
The median debt of 2009 Marquette graduates was $25,635, said Susan Teerink, director of the Office of Student Financial Aid. The average debt was $31,469.

In 2008, 63 percent of graduates left Marquette with debt, according to the Project on Student Debt, an initiative by the Institute for College Access & Success.

The source of this debt is student loans.

For the 2009-’10 school year, the total amount borrowed by Marquette students was $35,756,471, according to the Office of Institutional Research and Assessment. This marks a 51 percent increase from 2003-’04 adjusting for inflation.

Approximately 90 percent of undergraduates currently receive financial aid, which includes loans, grants, scholarships and work study.

Although loans appear in most financial aid packages, they shouldn’t be “confused as a charitable gesture,” said Mark Kantrowitz, publisher of FinAid.org and FastWeb.com, Web sites that guide students through the financial aid process and help them find scholarships.

Loans have to be repaid and are profitable for lenders — including the government — because of the interest rates that are charged on loans, he said.

“Loans are not really generosity or philanthropy,” Kantrowitz said. “It’s a way of paying the bills over time.”

Loans offer a source of cash flow because few people can afford to write a check right away for the cost of their total education, he said.

But debt doesn’t just affect individual students.

It limits graduates’ career options, deters them from going to graduate school and getting in more debt, and delays the purchase of their first homes, as well as other major purchases, said Edie Irons, communications director for the Institute for College Access and Success, which works to make higher education affordable and possible for students.

“We need more college graduates, not less, in order to stay competitive (as a nation),” Irons said.

Kantrowitz added that the need to borrow more money than their parents make in a year also stops many low-income students from enrolling in college.

The dangers of defaulting
Defaulting occurs when students are unable to make a payment on their student loans as scheduled in a legal contract when they took out the loan.

Student loans do not disappear even if a student declares bankruptcy. If a student defaults on a federal loan, the government will be paid back, Kantrowitz said.

The government can sue students, garnish their wages up to 15 percent of their take-home pay, deduct up to 25 percent of the monthly loan payment for collection charges, prevent graduates from renewing their professional licenses, collect their social security benefits and take the full amount from any state and federal income tax refunds, he said.

Although private lenders do not have as much power to reclaim their borrowings, they are able to garnish wages — not limited to 15 percent — with a court order, as well as leave nasty phone messages, he said.

“It can be devastating to have people be unable to pay off their loans and end up ruining their credit,” Kantrowitz said.

Poor credit ratings make it difficult to get other loans and loans with low interest rates. They can also prevent the purchase of a car or a home.

Most students who default on their loans do so within the first five years, Kantrowitz said.

Defaulting primarily occurs when students are unable to find jobs after graduation, if they have high interest rates on their loans, or if they don’t graduate at all. Students are three times more likely to default if they don’t receive a diploma, Kantrowitz said.

Of the 45 percent of 2009 Marquette graduates that completed the Graduating Seniors Survey late last April, only 26 percent had been offered a full-time job.

Despite this number, Marquette still has a low default rate.

While the fiscal year 2007 national cohort default rate was 6.7 percent, Marquette’s rate was 1.1 percent.

Kantrowitz said it’s typical for four-year, nonprofit universities to have such low rates because their students tend to be wealthier, and thus are less likely to default.

Teerink said this low rate is a testament to Marquette students’ responsibility and how they’re meeting obligations, even if they’re borrowing a lot.

When a school’s default rate has been consistently high, the federal government requires the institution to have a default management program until the rate declines.

Because Marquette’s rate has been low for at least a decade, the Office of Financial Aid doesn’t have a default management program. Instead, advisers answer students’ questions and encourage them to do online exit counseling for federal Direct loans, Teerink said. Exit counseling ensures students are aware of their rights and responsibilities when it comes to loan repayment.

Get back in the black
Although students can’t always avoid borrowing money, there are some things they can do to lessen their chances of ending up with massive loans and defaulting.

If students have to borrow, they shouldn’t do it in excess. When taking out a loan, students shouldn’t borrow more than twice the money they expect to make with their first job, Kantrowitz said.

Irons recommends students think about how much debt they’re accumulating over all four years of college and how much their monthly payments will be.

“If students do have to borrow, use the safest options first,” she said.

Irons said students should borrow federal Perkins loans, subsidized campus-based loans; subsidized federal loans where interest does not accumulate while in school; unsubsidized federal loans where interest does accumulate and that any student can receive, regardless of family income; federal PLUS loans that are taken out in parents’ names; and private loans — in that order.

Teerink said she agrees students should exhaust their federal loans first.

“If I could shoo every student away from borrowing a private loan, I would,” she said. “But again, I can’t advise them on private loans.”

By law, financial aid advisers can’t recommend a private lender and can only answer general student questions about private loans.

Teerink also recommends that students don’t “borrow for a lifestyle.” Live like a student while a student so you don’t have to do it after college, she said.

In order to pay off her huge debt, Kenny will be living like a student for a bit longer. She plans to live at home and only spend on small personal expenses.

Although graduate school is in the back of her mind, Kenny admits it’s not financially viable right now. She said she’d only be able to go if the hospital she was working at would help her pay for it.

Because Kenny won’t have any major expenses for a while, she’s not worried about defaulting on her loans.

“I take things seriously,” she said. “I’m responsible for my loans.  I want to prove this was worth it.”