Student Loans: How Excessive Debt Limits Career Options

Last Updated Mar 17, 2011 9:42 AM EDT

Part two of a series on college kids and money, based on an interview with Stephen Seaward, an advocate for financial education in the classroom. Find part one here, part three here and part four here.
College students taking out tens of thousands of dollars in loans for their education often have no idea how those loans will restrict their career choices -- or how layering credit card debt on top of their loans is more limiting still.

Certainly, earning a degree opens many doors. So if your child needs loans to finish school, smart borrowing is a wise decision. But when a student borrows more than they truly need and burn money with lifestyle upgrades or, in some cases, by attending a costly private or out-of-state university, the burden of repayment may shut some of the same doors that their education opened in the first place.

"A lot of times seniors will come in to talk about their options," says Stephen Seaward, career development director at St. Joseph's College in West Hartford, CT. "They'll ask what could they do with a degree in, say, psychology or English. They might be interested in human services; working with at-risk children or people with cognitive disabilities, or maybe they want to be a public defender. But at the rate they're amassing debt they realize that those fields aren't really an option because they won't be able to pay the loans back."

Seaward recalls one student coming to him with $60,000 in loans and asking about the highest paying job she might get with her degree. "We didn't even get into the conversation about what she'd like to do," he says. "It was like she didn't care. She just needed to make money as fast as possible."

Plenty of people are interested in making top dollar, of course -- whether they have loans are not. But Seaward says that more and more he's finding students are forced by their debts to make money the priority, which leads to unsatisfying careers and, in some cases, unhappy lives. Says Seaward: "This looks like it's becoming pervasive among a generation of students graduating with all this debt."

On top of that, Seaward says, potential employers increasingly look at a student's credit history as well as their resume and their Facebook page, which further curbs career options for heavily indebted students. Employers do not want to hire someone who may be preoccupied with financial difficulties. "If nothing else," says Seaward, "a student should look at their loans from that standpoint."

The average college graduate has $24,000 in student loans and will owe $276 a month for 10 years, according to the Project on Student Debt. The typical grad also has $4,100 in credit card debt, reports student-loan giant Sallie Mae. According to one study, here's how this debt weighs on career decisions:
  • 47% of recent grads say their career pursuits are influenced by loan payments.
  • 40% of recent grads took a job that provided higher pay, but less satisfaction, in order to pay off their loans.
  • Half of today's college students say they are willing to sacrifice career satisfaction for a bigger paycheck.
  • One-third of today's college students say that student loans will influence their career choice.
These are troublesome findings on more than just a personal level. Student debt is distorting the labor market, so that as a society we are getting more bankers and lawyers and fewer teachers and scientists; at the margin we probably are getting more people who are unfulfilled, stressed and headed for poor health.

Everyone knows that college is costly. But most of us do not fully appreciate just how costly.

Photo courtesy Flickr user alancleaver.

In this series:
· Part One: How One College Turned the Student-Debt Tide
· Part Three: 3 Surprising Ways Debt Diminishes Campus Life
· Part Four: Common Money Mistakes in College
More on MoneyWatch:
· 8 Ways to Wipe Out Your Student Debt
· Student Loans: How They Changed One Life for Decades
· Student Loans: How They Changed Another Life for Decades
· Student Loans? First Pass This Test
· College: The Flawed Case Against Getting a Degree
· The Top Reason Kids Don't Learn Money at School
· Teaching Kids About Money, What We're Up Against
  • Dan Kadlec

    Daniel J. Kadlec is an author and journalist whose work appears regularly in Time and Money magazines. He is the former editor of Time’s Generations section, which was written and edited for boomers. Kadlec came to Time from USA Today, where he was the creator and author of the daily column Street Talk, which anchored the newspaper's business coverage. He has co-written three books, including, most recently, With Purpose: Going from Success to Significance in Work and Life. He has won a New York Press Club award and a National Headliner Award for columns on the economy and investing.

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