Amid fears about debt, one family goes to the extreme to avoid student loans

Holly Bailey
National Correspondent
The Lookout

Claudia Poglianich had just one major request when her daughter Olivia began looking at colleges two years ago: that Olivia would pick a school where she had the greatest chance of emerging debt-free.

It was an ask that seemed almost quaint in a world where college costs have reached record highs and students are almost expected to incur major debts to pay for their education. But Claudia, a 45-year-old public relations worker for government agency in Oyster Bay, N.Y., was determined to have her daughter escape the albatross of student loan debt that weighs down many college graduates.

“It’s horrible what these young people are going through, leaving school with all this debt that they struggle to pay back,” Claudia told Yahoo News. “I didn’t want that for my daughter.”

So when she graduates in two years, Olivia, a 20-year old communications major at Cornell University, is aiming to be a rare case in higher education: a graduate from modest means with zero student loan debt.

It’s a goal Olivia admits is a struggle sometimes—especially at a university where she says so many of her classmates are financially better off than she is or are relying on major loans that allow them to spend more money.

“It is not always easy, but it is amazing that I will graduate from here without a lot of debt,” Olivia said. “I will be incredibly lucky."

The road to being free from student debt hasn't been without sacrifices for Olivia or Claudia.

It began with Olivia bypassing other schools that had been on her wish list, including Boston College, Northwestern, and the University of Southern California—none of which offered enough financial aid to make it possible for her to attend. She also considered some state schools, but none seemed to have the  endowment program available to help students in need.

"We had to look at schools like they were a business," Claudia said. "Who could offer us the best package in the long run?"

Cornell's tuition and fees total an eye-popping $61,000 per year. But because of Olivia's high grade point average and Cornell's $5 billion endowment—one of the largest of any university in the United States—she's eligible for a number of scholarships and other types of financial aid.

Claudia pays whatever is left over, with help from Olivia—who, in addition to holding down a full-time schedule of classes, works as an administrative assistant at Cornell’s career services office while at school and works summer jobs at home. She also participates in unpaid internships. "Time management," Olivia says, "is not a problem for me."

But Claudia has made the bigger sacrifice.

As a single mom, she has scrimped and saved for years to pay for Olivia’s college education. Years ago, Claudia stopped contributing to her own 401(k) and other retirement accounts, putting the money into Olivia’s college fund instead.

Claudia also sold her house and lives with a roommate. And instead of leasing a car, she borrows a friend’s to save money. Though she declines to specify numbers, Claudia says most of her salary goes toward Olivia’s tuition.

The most nerve-wracking month of the year for the Poglianich family is May, when Cornell discloses how much financial assistance it will give a student for the upcoming year. The number is never the same, Claudia said, adding that she still hasn’t heard how much she’ll have to pay for Olivia's tuition next year.

“Every year, we hold our breath. My contribution of my salary has been going up, and you tighten the belt buckle more,” Claudia said. “I tease Olivia, and say, ‘You know, Mommy doesn’t have a shoe fetish like most women my age. I have a tuition fetish.’”

It’s unclear how many families are like the Poglianiches—there are no statistics on how many students try to get through college without incurring student loan debts. But Claudia’s push is not entirely surprising amid growing concerns that student loans might be hurting the nation’s economic recovery.

According to the Consumer Financial Protection Bureau, student loan debt surpassed $1 trillion last year, and it's only expected to increase given the growing number of people who returned to college amid a weakened job market over the last two years.

The uptick in student debt has been linked to negative effects on the larger economy, in part because debt-ridden students have been forced to postpone or skip normal rites of life, like buying homes.

But student loans may be a sound investment in the long run. Education Secretary Arne Duncan and others have repeatedly described such loans as “good debt”—in that paying for a college education ultimately helps people secure a better job and make more money.

A study released last August by the Georgetown University Center on Education and the Workforce found that of the jobs recovered from the recent recession, “virtually all … required some sort of postsecondary education.” The same study found that college graduates were hired for better jobs that paid more money.

“You are still better off getting a college education and having that debt,” said Chris G. Christopher, an economist at IHS Global Insight who has studied the effects of the growing student loan debt on the economy.

Christopher said the job market is far tougher on someone “who doesn’t go to college and doesn’t get any student debt.” Even the low-end blue-collar jobs have grown more limited in the tough economy, he said.

“So, in a sense, it’s good to have that debt and get the education so that you have more possibilities,” Christopher said—though he added that success also depends on what kind of degree and employment an individual is pursuing.

With her financial aid for next year still up in the air, Olivia is quick to note that taking out a loan “wouldn’t be the worst thing in the world”—something her mom agrees with, though she insists it should be a last-ditch measure.

Years after she got her own degree, Claudia still remembers how much her monthly checks were to Sallie Mae—which she was still paying off when Olivia was born.

“Two hundred and twenty-three dollars and 83 cents,” Claudia recalled, with a laugh. “I remember that total so well. It has stuck with me.”

While she long ago paid off her own loans and doesn’t know anyone her age still working to pay off their student debt, Claudia isn’t so sure that will be the case for Olivia’s generation, which is incurring bigger debts because of the spike in college costs. That's why she is so determined to help her daughter, even if that means she has to make major sacrifices in her own life.

“Something is wrong here,” Claudia said. "All my choices, all of her choices, are governed by how expensive college is, and I know we can't be alone. ... Something has to be done, but I don't know what. I hate the burden that gets put on these kids."

She added, "We're scraping by, and it's tough. But when she gets that diploma in two more years, it will all be worth it.”