Sadie Cheney whipped out her cell phone and pulls up her billing statement on the Knox website.
“I don’t really know how this works honestly,” she said, studying the figures. She typed a few into her calculator app. After scholarships, the freshman from Fremont, Michigan is on the hook for a grand total of $50,000.
“I’m gonna be so broke,” she says to the number staring back at her, shaking her head slowly. These are the loans Cheney will have accrued by the time graduation day rolls around in 2021.
Many college students are uncertain about just how much money they are liable to pay back to the federal government or a private loan company once they graduate or stop attending school.
“I don’t even wanna think about this anymore,” Cheney said, shaking her head at her post-graduation financial future.
This sentiment was shared by Minnie Kang, a freshman from Portland, Oregon.
“I thought I knew what I owed but I actually don’t,” she said over a Social Psychology textbook in the Gizmo one afternoon.
She explained that she could go back to the Business and Financial Aid offices, and get another breakdown of costs, but it seemed futile. She has homework to do right then and finals were looming.
Kang pulled out her laptop and goes through the same routine Cheney did the day before: clicking on the school website, her personal account, then her spring term billing information. Her fingers hovered over the keyboard for a minute, “I’m scared.” Then she opened the bill.
The calculator informed Kang of her graduation day figure: $25,000.
Surprised, Kang said: “I’m stoked because I was under the impression that I had to pay way more.”
However, financing her education doesn’t end there forKang.
Kang’s mom, Tasha Hewett ,takes out Federal PLUS loans every term, which are the only federal loans that parents of undergraduate students can borrow to help their child pay for college.
There are other ways for parents to help, such as taking out private loans or financing their mortgage, but Federal PLUS loans are more common.
The money that Hewett owes for her daughter’s bachelor’s degree will be $54,000 (not including interest) by the time she walks the stage and gets the official paper.
“She’s still paying off her own college debt, and now she’s paying mine,” Kang said, adding, “I’m never having kids.”
This pattern of student debt crossing generational lines within families is widespread. According to the Consumer Financial Protection Bureau, “The number of older student loan borrowers has quadrupled” in the last 10 years, with the majority of those loans taken out “for their children’s education.”
Sadie’s mom Allison Cheney, eager to help her young daughter, also applied for a Federal PLUS loan, “but she got denied,” Sadie explained. This meant that teenage Cheney had to take out more loans in her own name to cover the costs of attendance.
Many parents who co-sign their children’s loans don’t understand “the long term cost and risks associated with this debt,” according to the Consumer Financial Protection Bureau. Their report raised concerns about whether the loan signing process “fully brings to the attention of older co-signers that they are taking on liability for the debt.”
The risks that accompany Parent PLUS loans are substantial. If Kang were to be unable or unwilling to make payments, her mom would be on the hook for all that borrowed money. If Hewett defaulted on the loans, her own credit would be affected.
“I have to pay something eventually,” Cheney said of her loans, knowing she has no one to default her payments onto if she can’t afford them once the bills start coming in. With career aspirations in the journalism field, Cheney had worries about her ability to pay.
Like Kang’s parents, Cheney’s also took out loans to finance their own undergraduate college educations.
“My dad is still paying them off,” said Sadie, but her mom was able to get the last of her loans forgiven a few years ago through working at a nonprofit.
This idea appealed to Kang too.
“My mom keeps telling me to join the Peace Corps,” she said, “and I would like to, so maybe I’ll do that.”
Working in the nonprofit sector with loan-forgiveness programs is an appealing alternative to making monthly payments for decades like her parents are still in the midst of doing.
Kang will not be done with her higher education after Knox, either.
“I wanna go to grad school for psychology. I wanna be a prison psychologist,” she said. Of course, graduate programs also come with huge sticker prices. “I don’t know anything about grad school. I don’t have the money for that.” It seems like even more student loans are in Kang’s future.
When Minnie asked her mom about how long she’ll be making payments on the Federal PLUS loans, Hewett replied, “Forever.” More specifically, she estimated, “Like 40 years,” adding that her daughter “can take them over when [she] gets rich.”
Hewett remained positive about Kang’s future and her current investment in her daughter’s time at Knox, reminding her, “I’m glad you really like it and you’re working hard.”
For the majority of Knox students who have loans, the National Student Loan Database System is an online resource that shows how many federal loans a student has taken out to date and how much interest has accrued on them since they started school. “As a student, I wish I would have known along the way, so I could keep track of the money I really didn’t need in the full amount of loans,” Director of Financial Aid Leigh Brinson said.
The Financial Aid Office has also created an online document listing about 500 different outside scholarships for college students, because as Brinson said, “Let’s think outside the box. We want conservative lending, we don’t want it to be the first option” for students trying to afford a Knox College bachelor’s degree.