Dylan Slinger works three jobs and keeps track of every dollar that he spends. Even so, the Wharton junior expects to graduate with $100,000 in debt.
Theodore Marschall, a senior in Wharton and the College, is in a similar spot with about $50,000 in private loans, in addition to about $24,000 in federal loans.
At an Ivy League school like the University of Pennsylvania, Slinger and Marschall are very aware that their financial situation is not the norm — at least, it doesn’t seem to be on the surface. “It’s definitely something kids don’t really talk about,” Marschall said.
However, according to the numbers, student debt affects one in five current full-time undergraduates at Penn. Nationwide, about 39 million graduates have student loans as well.
A recent study published by Robert Hiltonsmith at Demos, a public policy organization, shows that student loans can continue to affect graduates long after they have finished paying back every dollar.
Hiltonsmith’s study estimated that $53,000 in total education loans, or the average for a two-debtor household, can cost more than $200,000 in lifetime wealth loss through lower home equity and retirement savings.
“Demos identified this as … one of the larges economic issues facing our country,” Hiltonsmith said of student debt. “Personally, I also have a pile of student loans from grad school, so that made me particularly interested in getting into this space as well.”
Penn’s no-loan policy means that students at the University have more than $180 million in undergraduate aid aimed at decreasing the amount they would have to borrow, Marlene Bruno, director of communications for student registration and financial services , said in an email. The policy has been in effect since 2008, and is currently helping almost 5,000 students. Incoming 2013 freshman received an average aid package of $44,772, including grants and work-study job.
As a direct result of this, the average Penn student leaves Philadelphia with about $7,000 less in debt than the average graduate of a four-year university.
“It is our firm belief, from President Amy Gutmann and the Board of Trustees, that our no-loan program is the right thing to do nationally and the right thing to do for Penn,” Joel Carstens, Penn’s university director of financial aid , said in an email.
Even though “Penn is still committed to meeting 100% of a student’s demonstrated financial need [some students] may still choose to borrow to assist with their family contribution, health insurance , or other costs,” Bruno said in an email.
In Marschall’s case, his loans help to pay for his family contribution. “Penn covers roughly half of what tuition would be,” he said.
For Slinger, Penn also overestimated his family contribution.
“I’m a first generation in college,” he said. “I don’t think my parents ever expected to make [enough] to send me to an Ivy League.”
Slinger said that he has tried to appeal to SFS several different times, and this year was less disappointed with his aid package. “My expectations have been lowered so much after my freshman and sophomore years receiving nothing in comparison to what I needed.”
Dealing with loans can be scary, Marschall added, especially thinking that the pressure of paying back what he calls a “staggering amount” is just on him. Because tuition and debt aren’t widely discussed on campus, he found a mentor at his summer internship that helped him predict how to deal with his loans in the future.
“[My loans] weigh on me, push me to work harder,” he said, because he is very aware of the price of his college education.
Both Slinger and Marschall chose Penn deliberately despite the high tuition — they knew when they applied that, as an Ivy League, it provided the promise of better job placement after graduation.
Hiltonsmith’s study showed that households who have loans actually make, on average, about $5,000 more per year right after graduation, because they prioritize paying back their loans.
“I’m always very cognizant of the career path I’m taking,” Marschall said. He picked an internship at Morgan Stanley in investment banking with his loans in mind.
Even though Marschall has a job secured after graduation, the study shows that a sizeable percentage — on average, about 10% — of his income might end up going towards his loans.
“We’re talking something [around] nearly $500 a month,” Hiltonsmith said. “And that’s a car payment, a big car payment, actually. That’s half or a third of a mortgage payment.”
Paying back loans means more than just choosing to cook meals at home or skipping a morning latte. In the end, an average two-debtor household could lose $200,000 in lifetime wealth loss. Hiltonsmith said.
Marschall, however, is still confident that his diploma will be worth it in more ways than one.
“Overall, Penn is really great with financial aid and it could have been a lot worse at another school,” he said.
Slinger agrees saying that, “I think Penn has some catching up to do [in terms of financial aid] but I generally think that they do better than everybody else. [Even] if I came out of Penn and came out of Wharton with $250,000 in loans it would be worth it.”
“The way I look at it is I’m betting on myself with these loans,” Marschall said. “I have this belief that I’m going to be successful.”
