When Latrice Doston was in high school, she learned if she was going to go to college, she was going to need some money. She thought tuition, room and board, books and everything else that comes with the price of college would magically get covered.
And with that, Doston entered the long and complicated process of applying for student loans. She’s 23 years old now, and lives in the Russell neighborhood with her dad and siblings. After a stint at community college, she’s finishing her degree at Lindsey Wilson College, a private liberal arts school in South-Central Kentucky. And Doston estimates she’ll owe about $25,000 for student loans when she graduates.
“It scares me,” Doston says. “I don’t want my credit to get bad over this. But I just feel like I have to at least go for it because you need a college education now to get a good job and get the life you want. You gotta go for it.”
That’s the situation a lot of young people find themselves in: chasing a better future, but going tens of thousands of dollars into debt at the same time. And in Kentucky, more than almost anywhere else in the nation, students aren’t paying back those loans and are facing the consequences of default.
Third in the Nation
Kentucky ranks third in the country in student loan defaults, behind New Mexico and West Virginia. More than 15 percent of borrowers end up defaulting on their student loans. That’s a little more than 12,000 borrowers.
Default is dependent on the terms of a loan. But usually it’s when a borrower hasn’t made a payment for nine straight months. And for some of these students, they just don’t know they’re in default.
“There’s obligations that the student has to have and supposedly know about,” says Lashala Goodwin, the executive director of the KentuckianaWorks College Access Center. She says some colleges haven’t done a great job explaining to teenagers the terms of a loan. But, she says financial literacy is improving.
“Before, it’s like you got a student loan and you got a student loan, that was it,” Goodwin says. “You did your counseling, but it wasn’t to the extent that’s like you know you have to pay this back.”
Molly Gesenhues is a lead counselor at the Educational Opportunity Center. It’s a free program under KentuckianaWorks College Access Center which helps students navigate college applications, financial aid forms and other things.
“The majority of individuals that have defaulted on loans are often people that again attempted school and dropped out and didn’t even complete a semester’s worth of work,” she says. “But they got that loan money and spent it and then it’s on their record and they don’t realize, that hey, once you drop below half-time or once you graduate, you have six months before you have to start making payments.”
Her office helped about 2,800 students during the last school year — mostly first-generation college students, low-income students and students of color. And she says race and class can play a role in whether a student ends up defaulting.
Factoring in Policy
Nationally, black students are more likely to take on student debt. And in Kentucky, historically black college Kentucky State University has the highest default rate of any of the commonwealth’s public universities.
But there’s another reason Kentucky students may be more likely to go into default: government policy.
“We rank as one of the worst states for higher education cuts,” says Ashley Spalding, a research and policy associate at the Kentucky Center for Economic Policy.
Spalding says while most states in the past year have reinvested in education, Kentucky has not. And since 2008, higher education funding has been cut 32 percent per student. That means higher tuition and more loans. But Spalding says students who default typically don’t have very much debt.
“That’s kind of counterintuitive to look at that,” she says. “But it really makes sense when you start thinking about why would someone spend $100,000 to go to school. Well often it’s to get one of these highly advanced degrees.”
Think about students who go to school for law, medicine or business or get some other advanced degree. Or even a Bachelor’s degree that garners a high salary, like petroleum engineering. Sure, some of these students take on more debt but their salaries will reward them for their career choice making it least likely that they’ll go into default. That’s not the same for someone who gets a less advanced degree, or worse, doesn’t finish school. They’ll most likely not get a high paying job and that can lead to default.
That’s the trap Latrice Doston is trying to avoid falling into. She’s considering pursuing a master’s degree after graduating from Lindsey Wilson College. When she’s done, she could owe more than $80,000 in student loans. Her dream is to be a therapist, which has an average salary of about $35,000.
Despite this, Doston is determine to get her degree, no matter the cost.
“Hopefully I can get a place; I can get my own place in the NuLu or Highlands area and I’ll be a therapist at Seven Counties seeing children and just having a great life,” she says. You know, buying books and reading. You know, paying off my student loans.”
For students like Dotson, the dream of completing a degree outweighs the risk of default.