Chicago suburbs, by flikr user Scorpions and Centaurs

American student loan debt totals nearly one trillion dollars. These loans break down to about $23,300 owed by each borrower. Changing Gears has been reporting on the effects of that debt and what it takes to pay it off.

We want to know how student debt affects big purchasing decisions. Are you ready to buy a house? And if so, can you get a mortgage?

Tell us how student debt affects your housing plans.

Victor Gregory teaches high schoolers about cars. He worries when they take on debt after graduation.

Americans owe close to a trillion dollars in student loan debt.  Changing Gears has been reporting on that debt, a lot of which comes from attending private, for-profit schools.  They’re the fastest growing part of higher education, popular for non-degree technical training.  Call them career colleges, technical schools or trade schools … just don’t call them cheap.

Fact: For-profit schools cost more than community colleges.  Fact: For-profit students borrow more, then default more than students from public colleges.  Fact:  All this explains why I ended up at the strip club in Detroit.

So I’m at Cobra’s the Grind, eyes-avoiding-buttocks, walking up dimly lit stairs to meet the manager. Steve is a big guy; he started here as a bouncer. He lays his gun down next to us as we talk.  He had different life plans after graduating high school in 2006.

“Not this,” he says.  “I mean, I don’t mind it now but I didn’t think I’d be here.  I thought I would’ve been in a shop, turning a wrench.”

He wanted to work on cars.  So he got a diploma in automotive technology at Lincoln College of Technology in Indianapolis.  It’s part of a big for-profit chain.  The program was about a year and roughly $25,000, not including housing.  An associate’s degree from community college would’ve cost less than ten grand.

“My mom was actually talking to me about it, but I wouldn’t listen, I was stubborn,” he says.  “Whoever takes their mom’s advice, until you f*** up?  I regret it.”

He didn’t find a car job, but he says he did rack up about 30 thousand dollars in debt.

Victor Gregory taught Steve’s auto class back at Dearborn High School.  He also  teaches at the local community college.  That’s partly why the cost of for-profit training worries him.  He’s actually barred some schools’ recruiters from his classroom if they can’t demonstrate good student results.

“I do not want my students going out in the field and becoming balled and chained to a bank.  And having to park the whole idea of having a better life, just so they can pay their debts,” he says.

Victor Gregory doesn't want his students "becoming balled and chained to a bank."

The big question is return on investment: What do students get for the cost?  The private, for-profit sector of higher education is so broad, it can be hard to generalize.

But take the big, publicly traded company Universal Technical Institute Inc., or UTI.  It has a campus outside Chicago.  The median cost of its 15 month auto tech certificate program is $30,000.  According to the school, the median federal loan debt for that program is about $14,000.

Tom Riggs is Senior Vice President of Operations for UTI.  He says its graduation rates are drastically better than at many community colleges.

“We graduate in the high 60%, sometimes 70% of our students who start, graduate,” he says.  “If you look at community college programs and certificate programs, a lot of their numbers are in the low 20s.”

Some students are drawn to short intense training.  They get hands their hands on metal, and then they can start earning money.  Riggs says employment rates coming out of school are also high.

“There are students out there who four year university isn’t the right thing for them,” he says.  “And they have tremendous talent and passion around the things that we do, and we are the right place for them.”

One reason yearly tuition is lower at public schools is they get public support.  But David Deming of Harvard’s Graduate School of Education says for-profits get a different kind of public support.  Their revenues come overwhelmingly from federal financial aid dollars.  In other words, from student grants and loans.

“For-profit schools are not allowed to take any more than 90% of their total revenue from federal financial aid.  That’s the maximum and quite a few schools are relatively close to the maximum,” he says.

For-profit students later default on their federal loans more often than those who attended public schools or private schools that are not-for-profit.

Still, it’s not hard to find technical school graduates who are employed and paying back those taxpayer dollars.  I just went down the street to Suburban Chevrolet of Ann Arbor, where Andrew Marihugh works.  He recently graduated from UTI.

“I was told it was one of the best in the country,” he says.

He’s repaying $25,000 in loan debt from his training there.

“It was worth it,” he says.  “I think it was worth it.  There’s a lot of people that went to school there and there’s a lot of them that didn’t know how to even change oil.”

Marihugh is now an oil change technician, also called a lube tech.  That’s the most entry level position here.  He’ll work his way up.  And in ten years, he’ll have worked off his debt.

*This story was informed by the Public Insight Network. Add your story here.

 

 

 

 

 

 

 

 

 


whitehouse.gov

You might have heard something about a speech last night. From his claim that GM is back on top (rated “half-true” by PolitiFact.com), to his mention of a battery plant worker from Holland, Mich. (which, by the way, we’ve covered before), the Midwest got plenty of attention from the President during his State of the Union address.

And he’s not done with us. This afternoon, the President is in Cedar Rapids, Iowa to talk manufacturing jobs. He’ll also be traveling to Arizona and Nevada. This Friday, the President returns to the Midwest for a stop in Ann Arbor, Mich. This time, he’ll be talking about higher education.

During the State of the Union speech, President Obama said higher education shouldn’t be a luxury, and he’s committed to funding it. That was the carrot for colleges and universities. This was the stick:

“Let me put colleges and universities on notice: If you can’t stop tuition from going up, the funding you get from taxpayers will go down,”

The idea is similar to a law passed in Michigan last year for the state’s public universities. They raised tuition anyway.


Sarah Alvarez

David Dolsen (l), Jason Gumenick (center) and Lila Howard (r) sit in Saline High School.

It’s been a tough few years for teachers. Classes are bigger. Pay is down. Benefits cost more. And, in the last year, teachers across the Midwest have been at the center of collective bargaining fights in Wisconsin and Ohio. With all that, we wanted to know what it’s like to be a teacher today. So, three generations assembled in Lila Howard’s classroom at Saline High School near Ann Arbor. Howard is about to retire after years teaching AP Psychology. Jason Gumenick teaches government and is in the middle of his career. Then, there’s David Dolsen, a college freshman, who had both of the others as teachers.

“They’re probably two of my favorite teachers in high school and also two of my mentors here as well,” he said as the three sat at a table in the classroom.

Now, he wants to become a teacher and looks to Lila Howard and Jason Gumenick for advice. He knows they love what they do, but he hears from Howard what they’re going through.

“Taking away your bargaining rights, taking away your job security, tenure, money, things like that. So, how do you feel about that, David?” Howard asked. “Are those concerns you’re mulling around in your mind?”
“Definitely,” Dolsen said. “The only reason I’m not 100% sure that I would want to be a teacher is essentially because of those issues. The pay for teachers even is not very good, obviously, and there’s just no real security now.”

Jason Gumenick and Lila Howard have already seen their pay cut, and benefit costs rise. Howard thinks she’ll need to get another job in retirement. Jason Gumenick, who’s 37 and newly married, is not running out the classroom door, but in the back of his mind, he’s thinking what he could do if he were to leave teaching.

Sarah Alvarez

Saline High School

“I think a lot of teachers need to start thinking about Plan B,” Gumenick said. “Administration, public policy, business, different opportunities that might be out there.”

Howard chimed in: “Overall morale has, I think, drastically changed as a result of what’s going on in education.”

As David Dolsen, the college freshman hears all this, he begins to realize there might not be opportunities for him at home.

“I don’t think I could get a job in Michigan in teaching probably, or even in the Midwest from what it sounds like,” he said.

And, he’s thinking about alternatives.

“I’ve started to look at engineering.”

But not so fast. There’s some good news for prospective teachers like Dolsen. Dr. Cathy Rosemary, who chairs the education department at John Carroll University, says we could soon need a lot of them in the classroom.

“In the next ten years I see a big shortage,” she said. “Because I think classrooms—schools in general—are populated largely by women in their 50s and 60s and there will be time in the next decade when these folks will be retiring.”

Not only that, Craig Brown, a lawyer who represents school boards, says the changes in teachers’ contracts can benefit those new teachers entering the field. Loosening seniority rules can help the young get ahead.

“We’ve all read and heard about that teacher of the year in Indiana who was laid off after that school year because she was a young, new, exciting teacher but she didn’t have the seniority to maintain her job when the district faced financial difficulties,” Brown said.
And, for all the angst among teachers and prospective teachers, Lila Howard says this is still a calling. She wouldn’t trade this job.

“The students are the best thing about teaching,” she said. “That’s the bottom line. Being with them every day. Working with incredibly wonderful young people. The future of our society!”

And, as Howard works her last few months in Saline before retiring, all the political focus on teachers has her thinking of running for school board.

Sarah Alvarez contributed to this story. It was informed by the Public Insight Network.


You may have heard the promos on air: This afternoon, Changing Gears will host a live web chat with teachers across the Midwest to talk about the many changes in the past year, and what the future may bring. The web chat accompanies a piece by Dan Bobkoff that’s airing across the Changing Gears partner stations today. It’s the latest in our STATES series. If you’re a teacher, or you’re interested in becoming one, join us here at 4:30 EST/3:30 Central.


Last month, Changing Gears teamed with authors and CNN anchors Ali Velshi and Christine Romans to collect your questions on the personal finance issues that you’re facing because of the recession.

Today, we’re bringing you the next in our series of Midwest Money answers from Ali and Christine, based on their new book, How To Speak Money: The Language and Knowledge You Need Now. (Each person whose question is used will receive a copy of the book.)

Today’s question comes from Regina Baldwin of Bowling Green, Ohio.

I am returning to school, while continuing to work full-time, to try to expand on my experience and enhance my ability to get a better job with a degree.  I’m concerned that I am on the correct path as I am over 40.  I am keeping my student loan debt at a minimum by attending a community college.  I am worried that I will not get a better paying job by the time I finish.  (If it makes a difference, I am pursing a BS in Business Administration-Computer Information Sciences with a focus on Accounting, and I currently work in healthcare.)

Ali and Christine answer,

If we were writing another book, we’d highlight you as an example of someone with exactly the right attitude and initiative in a new, more difficult jobs market. You are making exactly the right investment in yourself with this education and retraining, and the student debt you are taking on is what we consider “good debt.”

It’s even smarter since you are pursuing your studies at a community college. Bottom line, people are living longer and working longer, so the degree, the education and the work experience together are critical for many years of earnings.

At the same time, we hear you on your concerns that you might not end up with a higher-paying job in the end. Ali thinks your accounting focus is key. Accounting jobs are expected to grow 22% between 2008 and 2018, according to the Bureau of Labor Statistics. That’s much higher than the average of all professional occupations (17%) and translates to almost 280,000 new jobs.

(Click here for a gallery of the 20 highest paying jobs.)

Christine is enthusiastic about anything STEM (that’s the acronym for Science, Technology, Engineering and Math) and certainly computer fields are in there. In fact, more than half of all job hires forecast in the first months of this year are expected to be in tech. According to the Labor Department, median weekly earnings for computer scientists and systems analysts earn last year was $1,220 a week.

(Note: Changing Gears plans to report on STEM this year.)

It’s very important to be confident in your decision, build self-confidence and be aggressive: maximize your work experience as you pursue your degree. Network, volunteer for positions and new projects, and apply for internships in your new field. That’s tough while working full-time, we know, but short term pain will mean long-term gain.

Click to read Ali and Christine’s previous answers.


Retirement, debt, going back to school, and mortgages are all issues that are magnified by the recession. Where can you get Midwest Money advice?

Here. But you’d better hurry up. Through the end of today, CNN anchors and authors Ali Velshi and Christine Romans are taking Midwest Money questions from the Changing Gears audience.

We’ll be posting their answers next week. If Ali and Christine select your question, you’ll win a copy of their new book, “How To Speak Money.”

Send your questions by the end of today for Ali and Christine, then come back for the answers all next week.


Three stories making news across the Midwest today:

1. Chicago unveils microlending program. Chicago Mayor Rahm Emanuel unveiled a plan Tuesday to create a new organization that helps the city’s small businesses. The Chicago Microlending Institute would train potential lenders on advising and giving loans to people starting small businesses, and would be funded by a $1 million loan pool funded by the city. Our partner station WBEZ says the proposed institute would be run by ACCION Chicago, an area small business lender. Emanuel said small businesses sometimes struggle to get loans from traditional institutions. “That’s the hardest first step,” Emanuel tells WBEZ. “That’s the hardest loan. You don’t have a proven model. You don’t have a proven record.”

2. Auto dealerships undergo facelifts. Three auto dealerships in the Milwaukee area are joining a growing national trend of expanding or renovating their facilities. Jim Tolkan, president of the Automobile Dealers Association of Mega Milwaukee, tells the Milwaukee Journal Sentinel that auto manufacturers are requiring dealerships to remodel in order to meet “a look that is easily recognizable regardless of where you are in the country.” Others are unconvinced that dealers will recoup expensive outlays. “That is the unknown question,” Tolkan tells the newspaper. The National Automobile Dealers Association is expected to issue a report on the subject later this year.

3. Whoops! Indiana finds leftover $320 million. Indiana officials discovered Tuesday the state had $320 million more than anticipated in its main account. Gov. Mitch Daniels said the windfall came as a result of a multi-year programming error that was only recently caught by a stunned employee. Democrats aren’t necessarily buying the explanation after watching Republicans cut public education funding by $300 million at the end of 2009, according to the Indianapolis Star. “This wasn’t just an accounting error,” Senate Minority Leader Vi Simpson told the newspaper. “Children got hurt by this, families have suffered.”


People all over our region are deciding whether they should go back to school to learn new skills, and possibly begin a new career. But for some, there’s a big obstacle: how to pay for it. Should you use your savings — or borrow money? What’s the best place for returning students to find scholarships?

Authors Ali Velshi and Christine Romans want to help. All this week, they’re taking Midwest Money questions from our Changing Gears audience.

We’ll be posting their answers during the week of Dec. 19. If Ali and Christine pick your question, you’ll win a copy of their new book, How to Speak Money.

Click here and ask your Midwest Money questions about financing your education, or any other topic.


Three stories making news across the Midwest today:

1. Mining company lays off 600 workers. A mining company in Michigan’s Upper Peninsula will temporarily shut down part of its operations and lay off approximately 600 employees. Cliffs Natural Resources, which operates the Empire Mine in Marquette County, said production is expected to drop from 4.6 million tons in 2011 to 2.7 million tons in 2012, according to the Marquette Mining Journal. The drop comes because steel producer ArcelorMittal will take a blast furnace down for maintenance in the second quarter. A company spokesperson said the layoffs will last “several months” until the furnace goes online again.

2. Historic Cleveland property has new owner. One of Cleveland’s historic downtown landmarks was purchased today by a Canadian hotel and resort company during a foreclosure auction. Skyline International Development Inc. was the sole bidder for the Arcade, and purchased it for $7.7 million – the minimum bid, according to The Plain Dealer. The current site was renovated a decade ago for $60 million, but went into foreclosure in April 2009 when its Chicago-based owner defaulted on a $33.3 million mortgage. An attorney for the new owners said this is Skyline’s first U.S. real estate holding, but did not comment on the firm’s plans for the Arcade. With the property selling for the minimum, its creditors, including Bank of America, the city of Cleveland and Cuyahoga County, will not recoup any of their investments.

3. Chinese students Milwaukee bound. Hundreds of Chinese students could attend the University of Wisconsin-Milwaukee in coming years thanks to a recruiting agreement the school’s chancellor signed today in Beijing. An agreement with a Chinese education network will boost the university’s international profile and help lure Chinese companies to Milwaukee, according to the Milwaukee Journal Sentinel. It would also boost the school’s out-of-state tuition coffers. China is the city’s third-largest trading partner, according to the newspaper. The agreement runs for five years. “You could think of myriad ways these students could connect to help Milwaukee employers in China,” said Tim Sheehy, president of the Metropolitan Milwaukee Association of Commerce.