By the time Krystina Martinez transferred to her third college, she knew all the questions to ask about financial aid, student loans, grants, and scholarships to help pay for her undergraduate degree in communications. An experience five years earlier had left her burdened by debt and no degree to show for it.
Leaving school for lack of funds also shattered a belief her counselors and friends had drilled in her early in high school: that her combination of academic strength and Hispanic background would somehow work to her benefit. "If you make good grades, you'll be helped because you are a minority," people insisted.
Martinez, now 23, graduated from a high school about 30 miles north of Dallas in the top 10 percent of her class with a long list of extracurricular activities and high hopes. Applying for dozens of scholarships with no luck, she decided to attend the University of Texas (Arlington). Her financial aid came primarily in the form of student loans.
But when her parents couldn't meet the expectation of the $5,000-per-semester family contribution, she dropped out after her first semester with a 3.75 grade point average and more than $6,000 in student loans and unpaid tuition. "I was really naïve back then," she admits. She recalls feeling frustrated — by her parents, academic advisers, and the financial-aid system. "Why should I pay it back?" she wondered at first.
Martinez is among the growing number of Latinos who are going into debt to obtain a college education.
Two-thirds of students who earn undergraduate degrees end up shouldering more than $25,000 in debt, and 1 in 10 owe more than $54,000, a 2012 Center for American Progress report found.
Latinos and blacks are more likely to be weighed down by such borrowing as need-based federal aid for low-income students has become insufficient to cover rising tuitions. Some 81 percent of blacks and 67 percent of Latinos earning bachelor's degrees are leaving school with debt, compared with 65 percent of whites and 54 percent of Asians, according to the report.
At $22,886, the average amount Latinos borrow is slightly lower than for blacks ($28,692), and white students ($24,742). But many first-generation collegians say their parents, often hoping their children get the education they lack, offer little help in a confusing maze of federal and private loans that are often disguised as opportunity.
Martinez initially felt frustrated that her parents did not assist her more successfully navigate the college application and financial aid, process; in hindsight, she now places value on a cost-benefit analysis of attending a particular college or choosing a degree. She says she simply learned by "trial and error."
"As a first-generation college student, my family didn't know anything. I learned everything on my own, whether it was about getting student loans or applying for scholarships," she told Next America.
Few of these parents, particularly if they are immigrants, have the financial know-how to assist their children.
Stanford University undergrad Brenda Muñoz, 20, is the first in her family to attend college. Her parents, both Mexican natives, have a fifth-grade education. "They have no idea about the American educational system," she says.
Muñoz's San Francisco Bay Area family includes a younger brother and sister, a stay-at-home mom, and a father who is a demolition worker earning about $55,000 before taxes.
When she proudly announced her admittance to Stanford, Muñoz said her parents didn't fully grasp the achievement or comprehend the importance of the $41,250-per-year tuition reprieve Muñoz gets as recipient of a grant for low-income students. "For them, it was just another school."
In many recent studies of students assuming college loans, Latinos closely follow blacks on the amount borrowed in pursuit of their degree. Educators point to several common obstacles. Among Latinos, one factor is general lower income; another is a cultural lack of involvement with banks, heightening the challenge to save for college.
A report of 2011 banking habits found that 32 percent of U.S. households lacked a savings or checking account, and Hispanic, foreign-born, and black families comprised the bulk of them. The study found that 14.7 percent of Hispanics residing in the U.S. never had a bank account, which is generally a first step for saving.
Deborah Santiago, cofounder and vice president for policy and research with Excelencia in Education, contends that Latinos, much like Asian-Americans, have a strong aversion to borrowing to pay for college, even when they have the financial need. This disinclination may help to explain why Latinos graduate with lower average amounts of debt that the general population, she notes.
Immigrant parents may be accustomed to a cash-only economy in their homeland. Once they arrive here, they distrust banks and don't accept loans as a viable way to finance their kids' education, Santiago said. In Mexico, it's a pay-as-you-go economy, and people rarely have a relationship with a bank, she explains. "Your financial literacy is more limited."
In the end, these students make financial decisions that may impinge success. A cost-conscious student may choose to attend a community college to avoid loans. But other roadblocks exist. That same student may not complete a degree or advance to a four-year institution because of family, work, or other responsibilities. "If they enroll part-time, they're less likely to get a bachelor's degree," Santiago explains.
Collectively, students owe more in student-loan debt than credit-card debt. Many students are entering the workforce during a sluggish economy, putting them at greater risk of remaining unemployed by the time they need to begin repaying their college debt. Autumn figures released by the Education Department show that the default rates three years after graduating was 13.4 percent, slightly lower than the two-year cohort default rate of 13.8 percent.
Last year, undergraduates completed their degrees with an average of $26,600 in student loan debt, up from $25,250 in 2010, according to a recent report by the Project on Student Debt at the Institute for College Access and Success. The 2011 figure was 5 percent higher, following a growing trend that worries policymakers and students alike.
The thought of having nearly $100,000 in student loans for her law degree makes 25-year-old Anna Encinias nervous. Encinias is a third-year law student at Michigan's Thomas M. Cooley Law School, a private, nonprofit, independent institution that dubs itself "among the nation's most affordable."
"It scares me. It stresses me out," she says about her forthcoming September graduation. "Not only do I have to get a job, I have to get a well-paid job just to pay back the loans."
After paying upfront for LSAT courses and college application fees, and having some money for room, board, and unexpected expenses, Encinias is getting through school with loans. She had little aid from her parents in helping her select a school or walk her through the financial responsibilities she will have when she completes her degree.
While her father helps her cover part of her housing, books, and food until her next student-loan disbursement, Encinias says she often stresses about how she will repay what she's borrowing. "We're all out of money," she says, commiserating with other law students. "We're running up our credit-card bills."
"When I go home, when I finish here, I'll have to live with my mom until I have a job that pays well." As for her plans to get married, have a family, or start saving for a home, she says, "It'll have to wait another 10 years."
As for Martinez, the Texas student who initially dropped out with strong grades and a large tuition bill, she eventually returned to a community college after two years of working at a grocery store to repay her student loan. In the fall of 2010, she transferred to West Texas A&M University. This time, however, she read everything before she signed any papers and was more proactive about searching for outside scholarships and grants.
She graduated in December with $20,000 in student loans. Along the way, she is left knowing more than just what she read in textbooks.
"What I learned as a first-generation college student is that your parents don't know how to pay for it either, so they're looking to you to figure it out," she told Next America. "You have to ask questions. You have to be your own advocate."
This article is part of our Next America: Higher Education project, which is supported by grants from the Bill & Melinda Gates Foundation and Lumina Foundation.