Student Loans Plus Limited Job Options Equal Trouble

Akeya Dickson | 5/10/2012, 6:14 p.m.

When she graduated from the University of Iowa two years ago with a major in elementary education, Amber Newman envisioned standing in front of a class of bright, energetic youngsters and providing them with the solid educational base that would help them become successful in the upper grades as well as later in life.

But when Newman didn't land a job in the classroom, she found another way of working with young people - she's a nanny in Chicago to two boys, ages 1 and 4. Although it's not her dream job, she's glad to have a job in this struggling economy. Any job.

"I'm okay, I'm not living on the streets, I'm not hungry," said Newman, who lives with her parents in suburban Chicago. "A lot of my friends have taken teacher's aide positions just to be involved in schools and get their foot in the door. Some work in daycare or are nannies like me. None of my friends who have done elementary education have changed their interest."

What has changed is the labor market.

"I kind of knew toward the end of my last year that there wasn't going to be a lot of regular teaching positions because of budgeting," Newman said. "When the economy went down, education took a big hit."

Two-thirds of the class of 2010 were met with a 9.1 percent unemployment rate - the highest in recent history - and an average of $25,250 in debt, according to "Student Debt and the Class of 2010," a recent study by the Project on Student Debt, an Institute for College Access & Success initiative.

The unemployment rate for teachers is likely to remain high as financially-stressed governments reduce jobs in the public sector.

Newman says enrolling graduate school while still job hunting is not a viable option.

"I think it just cost too much to go back to school," said Newman, who has about $30,000 in debt despite having received two scholarships. "When people ask me what I got my degree in and I say education, they would look at me kind of sad and say, 'Good luck.'"

And if the student is black, like Newman, he or she will need more than luck.

A study conducted by the College Board Advocacy & Policy Center in 2010 - the same year Newman graduated from college - found that student loan debt levels of $30,500 or higher were more common among 27 percent of African-American college graduates, compared with 16 percent of their white counterparts.

Federal Reserve data show that the median student loan amount for Whites increased from $13,463 in 2007 to $15,000 in 2009, an increase of $1,537. Over that same period, student loans for Latinos rose from $13,463 to $17,000, an increase of $3,537. The highest increase was among Blacks, rising from $8,285 in 2007 to $14,000 in 2009, a jump of $5,715.

Meanwhile, the percentage of households relying on students loans was also highest among African-Americans (27.9 percent), compared with 14.2 percent for Latinos and 15.9 percent for Whites.