Pulitzer-nominated lecturer highlights generation in debt

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Low attendance failed to dampen spirits at Thursday night’s “Generation Debt” lecture in the Bangor Room of Memorial Union. The lecture, given by 24-year-old Village Voice writer Anya Kamenetz, covered the interrelation of student loan debt, credit card debt and the national debt with a special focus on how college students can begin preparing now for a more stable future.

According to Kamenetz, a new era of easy credit has dramatically changed how we handle our debt and how we end up in so much of it.

“Credit companies used to decide who to issue cards to based on how likely that person would be to make their payments on time. Now their goal is to get people to take on as much debt as possible while making minimum payments in order to increase profits,” said Kamenetz.

Going into extreme debt has become the norm for college students. The average debt carried by graduates of bachelor’s programs has doubled in just over ten years to $20,000. Out-of-state students with few or no scholarships can expect to owe even more.

Besides loans and credit cards, one major factor in debt increase is a lack of responsible saving. The current savings rate of the average household is -.5 percent. This means Americans are, on average, spending more than they are saving. The rate among those aged 25 to 34 is worse, calculating out to -16 percent. According to Kamenetz, the easiest way to avoid this trap is to increase the amount of time your money has to grow.

“Go online and open an IRA [individual retirement account] tonight,” Kamenetz urged attendees. “There are no fees involved in opening one, and you can do it with any amount of money.”

Other tips included not using the grace periods and deferment options offered in regard to student loans. By beginning to pay as soon as possible, students can take advantage of those periods to pay down their debt before interest starts increasing it. Kamenetz also suggested paying off credit card debt before student loan debt, depending on the interest rates. Rates are often higher on cards, so paying them off first can lower the total amount students have to pay in the long run.

For more information, see Kamenetz’s book, “Generation Debt,” available online and at local bookstores.

This entry was posted on Monday, September 25th, 2006, 12:00 am. You can follow any responses to this article through the RSS feed.