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Student debt on the rise

When Ryan Kath proposed to Carla Corban, on Oct. 30, 2004, she blurted: “You want to marry me and my student loans?”

She said yes — and cried with happiness.

The accumulation of debt — especially student debt — is the biggest factor depressing the wealth of people under 40. By spending more on education and delaying careers, young people find themselves losing economic ground to their elders and creating a society that is more unequal, at least temporarily.

Carla Kath, now 26, started her career with what her parents and grandparents did not: $60,000 in student loan debt after getting an undergraduate degree from Millsaps College in Jackson, Miss., and a graduate degree from Boston University.

Her grandmother, Eleanor Corban, 80, graduated debt-free from Millsaps College in 1947. She lives on the family farm in Fayette, Miss. “It floored me when I heard how much she owed,” says the grandmother.

Carla’s father, Bob Corban, graduated debt-free from Millsaps College in 1973. After graduate school, he had $4,500 in student loans. He’s now an administrator of a psychiatric wing at a hospital in Tupelo, Miss.

“I’m not sure she understood how it would make her feel to have this much debt,” says her father.

Carla Kath’s first job after graduate school — working at a clothing store in Rochester, Minn. — left her wondering if borrowing so much had been a big mistake.

Then she landed a public relations job and later moved with her husband, a TV reporter, to Kansas City, Mo., where she runs regional communications for the American Cancer Society.

She believes her expensive graduate degree in communications put her on the right career track. “It was worth it,” she says.

The young couple lives a financially disciplined life to cope with student loans. They cut coupons for grocery shopping. They pack their lunch. They eat out only on weekends. They joined the YMCA instead of a fancier health club.

Still, they don’t see themselves as poor. They bought a $169,000 fixer-upper home in a neighborhood popular with other young couples. On Fridays, Carla treats herself to a $4.50 latte at a favorite coffee shop.

Carla’s best friend, Emilee Broussard, is still borrowing in preparation for a career. She’s adding a law degree on top of an MBA, on top of an undergraduate degree from Millsaps College.

When Carla’s grandmother graduated from Millsaps College after World War II, yearly tuition, room and board cost $6,400 in inflation-adjusted 2007 dollars. Today, it costs about $32,000.

Of course, in the 1940s, Millsaps didn’t have a 63,000-square-foot recreation facility featuring squash courts, weight rooms and a pool. Nor did it have an all-you-can-eat food court with five restaurants, 40 menu choices and Starbucks coffee. Or wireless Internet access that gives students access to 7,000 academic journals.

The bells and whistles that help drive up today’s college costs reflect the increasing value of higher education in the marketplace of careers, says Thomas Lemieux, an economist at the University of British Columbia who has studied income inequality in the United States.

“The cost of college is going up,” he says, “but so is the financial return you get for spending extra years in school.”