Berkshire Business Outlook

Educational debt: Massive loan payments can make living difficult for Millennials


PITTSFIELD — Faith Gagliardi can pay her living expenses with one of her monthly paychecks, but not both.

The equivalent of more than one of those paychecks that she earns as a digital marketing specialist for 1Berkshire goes toward lowering the approximately $130,000 that she owes in student loans. Gagliardi, 26, pays about $1,600 per month toward that sum.

"I understood that school costs money, but when I was 17 and going to college, it wasn't a conversation that I was having," said Gagliardi, who graduated from Wentworth Institute of Technology in Boston in 2013. "I knew that I had loans, but I didn't know the impact of that."

In the past, she's had to take jobs she didn't enjoy because they paid enough to service her loans. She took a job within walking distance of her apartment in Pittsfield, because she can't afford a car.

"I'm not hungry. I'm not homeless. I've got a good life," she said. "[But] there's certainly times when I'm facing the reality that an [opportunity] comes up and I can't take advantage of it because I don't have the finances."

Although Gagliardi's debt load is well above average, even for private college graduates, average student loan debt has been increasing for years. The average debt load for a 2015 graduate of a nonprofit college was $30,100, up four percent from the 2014 average of $28,950, according to an October 2016 report from the Institute for College Access and Success.

"It really is the second housing bubble," said Gary Levante, 29, assistant vice president of community engagement for Berkshire Bank.

Originally from Pittsfield, Levante attended the private St. Michael's College in Vermont and graduated with about $70,000 in student loans. Levante describes his loans as a second mortgage payment, at $700 per month. The debt affects his ability to save for retirement and travel.

"When I was looking at college, I don't think I fully understood what the cost would be when I graduated," he said.

Levante said he didn't have a real understanding of entry-level salaries when he took on his debt load. He hasn't entered an MBA program mostly because he can't afford it.

Darci Hess, 29, the business development manager at Hillcrest Educational Centers, graduated with $45,000 in student loans for her Emerson College education — a small amount compared to her friends. But she and her husband still made budget sacrifices because of their loan payments, including delaying starting a family. The couple's daughter, Charlotte, is seven months old.

The first in her family to attend college, Hess was a high-achieving student who was urged to attend private college.

"Everyone said, 'you have to go to a private school, you can get in anywhere,'" she said. "They didn't say, 'this is how you can finance it.' I wish I was educated more on that. Because I would have saved so much money."

It's important for families to determine the exact price of attending potential colleges — ideally before the student has selected a first-choice school, to avoid potential disappointment and financial shock, said John Bissell, President & CEO of Greylock Federal Credit Union.

Students and their families should make sure they understand repayment terms, including when repayment begins, the interest rate on the loan and monthly payment amounts, he said.

"[Think about] 'What kind of income will I need to sustain that?' How likely am I to earn that income?' Start really thinking in a budget-conscious way."

For those who have already graduated with loans, it's important not to extend the payment term if it can be avoided, said Christine Roberts, head of student lending at Citizens Bank.

"Pay as much as you can and get out of that debt as soon as possible," she said. After graduation, many borrowers have built up a credit profile that could enable them to refinance their loans at a lower interest rate, she said. Roberts clarified that most lenders themselves don't offer consolidation — the borrower must refinance through another institution. The borrower's record of paying on time — or late — also affects their credit score, she said.

"This is a big burden for many people," Roberts said. "[You've] got to understand what you owe, and what does that mean from a payment perspective."

Reach staff writer Patricia LeBoeuf at 413-496-6247 or @BE_pleboeuf.


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