New student loan program offers relief

Kelly Ohlert has a job at a Center City law firm, but she can't afford to buy a home to accommodate her growing family.
The reason: She racked up around $150,000 in student loans while earning a master's degree at the University of Pennsylvania and a law degree at Temple University.
Ohlert, 29, might be on the high side, but she is hardly alone. Pennsylvania residents' student debt averages ranged from $27,877 to $30,389 in the 2007-2008 academic year, according to estimates by FinAid, a financial-aid Web site.
That was well above the national average of $23,186 for the same year, which is the most recent available.
A federal law went into effect this month that allows people to adjust student-loan payments based on their income. The program limits monthly payments to 15 percent of the difference between the debtor's income and 150 percent of the federal poverty guideline.
After 25 years of qualifying payments, any remaining debt could be forgiven.
For example, Lori Fabrizi, a 30-year-old resident of Erie, expects to find a teaching job that will pay her around $40,000 this year. She thinks her debt payments under the program will amount to $152 a month instead of $350, and that she also qualifies for public-service loan forgiveness after 10 years of eligible payments and employment.
Why do Pennsylvanians have more debt to repay?
"It's the history," said Donald Heller, director of the Center for the Study of Higher Education at Penn State.
He said Pennsylvania is home to some of the country's oldest colleges, many of which are private schools with high tuition. And even some public universities, such as Penn State, are less like government agencies than their public university counterparts elsewhere. For example, Penn State, among big public institutions, is comparatively less funded by the state and not subject to as many state rules regarding things such as purchasing and hiring.
Fabrizi had considered doing graduate work at Edinboro University in western Pennsylvania. But she thought that if she went to Mercyhurst College, a private Catholic school that was closer to home in Erie, she'd only have to pay for one year instead of two. After she'd begun attending Mercyhurst, she learned that she'd need to take more classes than expected.
"It's unfortunate if there was a misunderstanding," said Michael Lyden, director of adult and graduate programs at Mercyhurst. He explained that Fabrizi needed to take more classes because she didn't enter the program with certification.
Now, Fabrizi has more than $55,000 in student loans. "I worked so hard to get to this place where I can afford things, but then I still can't," she said. "I should have gone to Edinboro."
Fabrizi has already had two job interviews and can make around $80 a day as a teaching substitute.
Pennsylvanians are managing their education costs better than others. Only 12.56 percent of student loans owed by state residents were 30 days past due or worse during the first three months of this year, compared with 12 percent during the same period of 2008. Nationwide, the comparable numbers rose to 15.79 percent from 14.4 percent, according to Experian Oliver Wyman Market Intelligence Reports.
Bobbie Britting, consumer-lending research director at TowerGroup, pointed out that Pennsylvania didn't get hit as hard by the mortgage crisis as other states.
Coping with debt still isn't easy. Monroeville resident Michael Colarusso and his wife owe around $65,935 in student loans combined. To manage the burden, he puts in about 60 hours a week doing side jobs such as coaching high school football in addition to his staff job at the Pittsburgh branch of the nonprofit Fayette Resources, Inc. Unable to afford child care, he works at night and she in the day so that someone is always home with their 4-year-old son. "We've had some hard patches," he said.
People struggling with loan payments can get help from the Student Loan Borrower Assistance Project, a program of the consumer-advocacy group National Consumer Law Center. The financial aid organization American Education Services, a division of the Pennsylvania Higher Education Assistance Agency, also provides information on YouCanDealWithIt.com.
To calculate your eligibility under the new federal law, see IBRinfo.org, a site created by the nonprofit Project on Student Debt.
Ohlert now wishes she had looked harder at other alternatives before taking on so much debt for her graduate work.
She might have taken more time to earn money before starting, for example, or completed a fully funded Ph.D. program instead.
"I'm proud of my accomplishments and I like my job," Ohlert said. "But if I had to do it over, I wouldn't have done it this way."


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