Tomorrow, Harvard begins cashing in its 10,000 men.
In greenback form, George Washington, Andrew Jackson and Benjamin Franklin will make their way from the fists of graduates to the Student Loan Office. With an average debt of $14,487, Class of 2000 graduates who took student loans could spend the next 10 years paying Harvard back.
Seniors' post-graduation plans have been affected by this impending debt, even factoring in Harvard's 1998 financial aid increase that allowed some students to reduce their annual loan requirement by $2,000.
When the Class of 2000's loans are due--the first bills will arrive in January, following a six-month grace period--this debt will mean an average monthly payment of $150 to $200. Associate Director of Financial Aid Janet L. Irons says that as long as these payments don't exceed 10 to 15 percent of graduates' income, graduates should theoretically be able to pay.
And usually they do. Nationally, roughly 10 percent of those receiving student loans default on them. Harvard graduates with loan debt default at only a quarter of this national rate, according to Irons.
The federal government requires that its loans be paid back within 10 years of graduation, and Harvard has pegged its loans to the same 10-year timetable. Yet despite Harvard's low default rate, the idea of years of loan debt is daunting for some students even before it's time to pay back.
"I've been terrified of student loans for the past couple of years," says Mia R. Alvar '00. "Now, I'm just like, whatever. They're going to get paid back eventually."
A running criticism of student loans is that they affect seniors' post-graduation plans--dreams of working for a non-profit are shelved in favor of consulting or investment banking because of the need to make payments. Graduate schools around the country and at Harvard have addressed this problem by forgiving loans for graduates entering certain public-service fields. Some federal loans to undergraduates have similar forgiveness provisions for students who become teachers.
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