Special Report July 19, 2009, 6:27PM EST

Student Loans: A Bitter Financial Lesson

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To be sure, students should also look in the mirror when searching for someone to blame for their credit problems. Many make questionable choices. But not all students accrue debt to maintain comfortable lifestyles. Katie Fleischman, a third-year doctoral student in educational and counseling psychology at the University of Wisconsin–Milwaukee, faced extra expenses when she considered attending graduate school. As a survivor of malignant bone cancer, the 28-year-old had to pay $800 a month to extend her health insurance coverage through COBRA. To fund her coverage, tuition, and living expenses, she borrowed more than $20,000 during her first year in graduate school.

Unlike many twentysomethings, she couldn't forgo medical coverage. "Being a cancer survivor, I had to continue my coverage. But my health would have had to outweigh my education," she says.

Degrees lose investment value, too

Ultimately, the reason for putting yourself in hock to Sallie Mae or other student lenders is to obtain the grail: an undergraduate or graduate degree. It's an investment in your future—the ticket to a comfortable existence.

Just look at how most investments have been performing lately.

Everyone from our college professors to our financial aid officers assured us that student loans were "good debt" because our educations would be long-term, steadily appreciating assets—unlike, say, a car. But if an education is an investment that appreciates, there should be the prospect of a solid return.

Instead the mountains of student loan debt have an unsettling parallel to another one-time boom market: real estate. Like those who took out big mortgages to fund their "can't miss" investments in pricey McMansions—only to find those homes suddenly dropping in value—those of us who took out student loans to pay for pricey degrees now find our prospects of securing well-paying jobs with comfortable lifestyles shrinking every day.

I've accepted this reality. But if I sought an education to add value to our society through my work as a journalist, I'd like at least to be able to pay off my loans with a reasonable interest rate—not the 5% to 8% I face today. (The Federal Reserve is currently lending money to the no-doubt-deserving likes of Goldman Sachs and Morgan Stanley at around 0%.)

And I'd like to believe what a professor recently told me, as I sat in his office appealing for more financial aid: My master's degree will ensure that I'll get a well-paying job and my loans will pay for themselves.

But that's not looking likely, especially in my chosen field. There's no certainty that I or my classmates will get jobs, especially well-paying ones.

As bailouts are doled out left to right, and stimulus packages are unwrapped to the tune of billions of dollars, spare a thought to the debt-ridden student. And for those of you who were able to get their educations in a far less expensive era, please don't lecture us about our irresponsibility in going into hock for what we were told was a necessity. After all, we'll likely be the ones funding your Social Security.

Emily Schmitt is a graduate student in business journalism at New York University. She holds a bachelor's degree in history from the University of Wisconsin. Before attending college, Schmitt worked in health care.