Hussain: Students need flexibility on debt

Syed Hussain, a native of the Bronx, is a senior at Cornell University.

Learning to swim is tricky business. Instructors can present the breathing techniques and various strokes, but at some point, you have to let go of the edge and experience a little bit of what drowning feels like. Acquiring massive student loans requires a similar kind of bravery.

As a first-generation college student daunted by paying the tuition of a four-year private institution without financial support from my parents, I have had to become a brave swimmer. My mother and father could not afford to take out loans for my education, nor do they have a college savings account for me. That left me with no choice but to work while I study and to take out several loans.

I have a lot of company. The Federal Reserve Bank of New York announced this week that outstanding student-loan balances stand at about $870 billion nationally -- more than the total balance on credit card debt.

According to a 2007-08 report by the National Postsecondary Student Aid Study, 66 percent of undergraduate students have taken out loans that average $27,803 by the time they walk across the stage in their caps and gowns. Research also shows that students are taking out more loans now than ever, to compensate for rising tuition costs. The average cumulative debt has increased by 5.6 percent, or $1,139 a year, since fiscal year 2003-04.

My college financing includes federal loans, some of which have subsidized interest, and private loans, the interest rates of which are very high. When I applied for them, I received a lot of advice on how to manage these loans through my college registration process, but nothing my parents, counselors and financial aid officers told me prepared me for the feeling of drowning in debt.

In talking to some fellow students, it seems that while everyone can figure out how to acquire student loans, paying them back is a puzzle. Often, I'm overwhelmed by the thought of repaying tens of thousands of dollars and wish my debt would just disappear. Forgiving student loan debt was a popular sentiment among Occupy Wall Streeters in the fall.

But even bankruptcy won't eliminate my loans. They would be forgiven only if I were to die. Since my best shot of getting out from under my loans is an untimely death, I need to start figuring out a repayment plan.

There's only a six-month grace period between my graduation date and the day I'll first receive a bill, so there's an expectation that I'll be employed coming out of college.

But new college graduates have been hit hard by the struggling economy. According to an analysis of Labor Department data by Northeastern University economist Andrew Sum, in 2009, 22 percent of college graduates younger than 25 were not working, while 22 percent were working in jobs that didn't require a college degree -- and thus were earning significantly less than their fully employed peers.

Recent employment data are finally showing some upticks, but the job market still looks bleak to those of us who'll soon be leaving campus. With graduation looming in just a few short months and no job offers on the table, I fear that many of my peers and I will be unemployed and have little hope of affording even our minimum monthly loan payment.

President Barack Obama appears to be trying to ease this issue with an income-based repayment plan that will reduce monthly payments on federal loans for 1.6 million college students. Starting this year, these borrowers will be billed 10 percent of their discretionary income, and have their loan amount forgiven after 20 years of payment. But 1.6 million borrowers are only a fraction of those who are struggling; there should be efforts to provide broader solutions. Programs that would either shorten or extend the duration of loan repayment -- depending on what would be best for the graduate -- should be considered. Customizing student loan collection could reduce the number of people who default.

That would be good for lenders and would mean better future credit ratings for graduates.

Tackling ever-rising tuition costs -- as Obama announced in January he is trying to do -- is a worthwhile effort. But there are countless students and graduates drowning now. An income-based repayment system that applies to more borrowers would be a life preserver that would give upcoming graduates a chance to breathe -- and help them stay afloat after college.