Two months out of Earlham College, Cooper Stansbury, twenty-two, was unemployed, stuck in his parents’ home in Ann Arbor, and beginning to fixate on January 2013. That’s when he has to begin repaying $20,000 in student loans.

The Community High grad says that when he picked Earlham “out of a hat,” borrowing money was an abstraction. Now, says the philosophy grad, “When I’m thinking ‘$20,000,’ I’m not thinking relative. I’m thinking of a brand-new car. ‘Here’s your diploma–also, you’ve got to give us a brand-new car!'”

Stansbury knows he’s luckier than many: on average, recent college grads owe $25,000. Earlham, a small liberal arts school in Indiana, eased its $50,000-a-year room and board tab with grants averaging $10,000 a year, and his parents covered most of the rest. But he’s still suffering sticker shock–not just for himself, but for his even more indebted peers: “Some people owe somebody three brand new cars, and that’s insane!”

And some, like thirty-two-year-old U-M law grad Kerene Moore, owe the equivalent of five cars. Unlike many of her classmates, Moore, a Detroit native, doesn’t come from money (her father was a chauffeur, her mother a home health aide). Divorced, with two kids and no child support, she filed for bankruptcy earlier this year. She says that at one point $2,000 would have been enough to stave off a loan default, but she just didn’t have it. Sometimes she questions her decision to attend law school here: MSU offered her a full ride. And she still owes those college loans: bankruptcy doesn’t wipe out student debt.

With Americans’ student debt approaching $1 trillion, the problem is commanding national attention. “We are putting colleges on notice,” President Obama warned during a visit to the U-M in January. “If you can’t stop tuition from going up, then the funding you get from taxpayers will go down.”

Martha Pollack, the U-M’s vice provost for academic and budgetary affairs, says no rules have been created yet to put teeth into that warning. In a telephone interview, she points out that the president also said that states need to increase their funding of higher ed, and the feds must continue to invest in financial aid. “We really need all three legs,” Pollack says.

As the state’s fortunes have declined, however, that leg has been cut short. From 2002 to 2012, the U-M’s base state appropriation plunged 26 percent, from $416 million to $308 million–and that’s without adjusting for inflation. In the same period, in-state tuition rose 80 percent–this year, LS&A juniors and seniors will pay more than $14,000. Throw in living expenses, and undergrads are looking at about $27,000 a year, making the U-M the most expensive public university in Michigan. Out-of-state students pay almost twice as much, $50,000.

Royal Oak native Kristen Schoettle considers herself fortunate: her parents prepaid her tuition years ago through the Michigan Education Trust. Working fifteen hours a week in the South Quad cafeteria, the LS&A senior has had to borrow less than $15,000. Like Cooper Stansbury, she empathizes with those more indebted. It’s getting so “only the wealthy” can afford Michigan, she says. “Especially the people from out of state. It seems kind of like a class divide.”

The U-M is extremely sensitive to charges that it is becoming a bastion for upper-class students. “We have done everything possible to keep access for all students,” President Mary Sue Coleman told the Detroit Free Press last November, in an article headlined “For many middle-income families, elite colleges are no longer within reach.” Challenged on its rising tuition, Michigan offers two major lines of defense. The first is quality: defining its competitors as the Ivies and other top public schools like Virginia and Berkeley, Michigan has always insisted in-state residents are getting a bargain, and many would agree. U.S. News and World Report–the dreaded scorekeeper of the college ratings game–recently put Michigan fourth in a list of the twenty top public universities.

The second defense is the egregious drop in state aid. Yet, increasingly, in Michigan and elsewhere, legislators and worried parents and students are asking whether raising tuition annually has become too easy a fallback for cash-hungry universities. Bernard Silberman, eighty-two, a longtime professor of political science at the University of Chicago (and my uncle), had a simple answer when I asked him why colleges charge so much: “Because they can.” My uncle is a tad cynical, but today a lot of young people feel they are being held hostage in a system where an increasingly expensive college degree is necessary to have even a shot at the good life.

Pollack emphasizes the U-M’s commitment to meeting the financial needs of every in-state student–and not just with loans. In fact, she says, the “story locally is that given a really aggressive focus on cost containment here at the University of Michigan, loan burdens for low-to-moderate-income students have been going down the last four or five years.” According to a chart she provides, borrowing by in-state undergrads fell from $4,000-$6,000 per year in 2009 to $3,000-$4,000 this year.

She adds, however, that the university is worried about “the increasing lack of [economic] diversity” among its out-of-state students. Just 50 percent currently receive financial aid, compared to 70 percent of kids from Michigan. Wanting to attract talented students from all backgrounds, her boss, provost Phil Hanlon, recently said that increasing aid to non-residents “is probably going to be the number one priority of our fundraising the next five or ten years.”

The university is barely ahead of the curve. This summer, when the U-M regents voted on the administration’s proposal to raise in-state tuition by a comparatively modest 2.8 percent, three regents opposed it. Denise Ilitch (who’s been discussed as potential Democratic gubernatorial material) complained that “the burden on our students continues to be brutal.”

By borrowing to pay tuition, many students carry that burden into their working lives. According to U-M spokesman Rick Fitzgerald, 51 percent of in-state U-M students graduate in debt, owing an average of just under $25,000. Among out-of-state students, 31 percent owe an average of $34,000.

Economists say that a four-year degree translates into an additional $1 million in earning power over a lifetime. But for both current students and recent graduates, the school debt has powerful ramifications, shaping everything from their choice of jobs to when they buy homes or start families.

Conquering heroes? Some U-M grads–and Ann Arbor kids who went to other schools–feel more like indentured servants.

At Nakamura Co-op House on State Street, half a dozen U-M students sit on benches around a long wooden dining table in the basement. I was a member here in the late 1970s, when I first moved to Ann Arbor. As they did then, co-op members keep costs down by running the house themselves–they do everything from cooking and cleaning to maintenance and keeping the books. Residents currently pay $562 a month for room and board, compared to nearly $1,000 a month for a sorority or fraternity and a bit higher for most dorms.

Despite their frugality, five of the six have borrowed to attend Michigan. One admits he’s too scared to find out the exact amount he’ll owe; the rest say that they expect to graduate anywhere from $10,000 to $100,000 in debt.

When the Great Recession spread across the country in 2008, most of these kids were either high school seniors or college freshmen. Community High grad Helen DeMarsh, a geology major, recalls that the college funds her parents had saved for her and her brother were invested in stocks; when the market crashed, two-thirds of their value vanished. That meant her parents, both musicians, were able to pay only one year of her tuition. She also had counted on getting $4,000 from the Michigan Promise scholarship–but the legislature cut all funding for that her freshman year.

DeMarsh works part-time for the U-M Museum of Natural History, and would like to go on for a master’s in museum studies. But with her undergrad degree leaving her at least $50,000 in debt, she shudders at having to take out more loans. “In thirty years, no one’s going to care that I studied [Russian playwright] Anton Chekhov’s writing style,” she says. “But my credit score will be out there!”

Another young woman, Jordan, won’t say what she owes, but admits that she’s been putting off her “loan exit counseling” session at the financial aid office, where students read the terms of their debts and acknowledge they understand their obligations. “It’s terrifying,” she says, of the moment when she’ll be confronted with the final bill. She’s frustrated that the debt she’s taken on will probably deter her from going into social work. “You get skills to do work that helps people–and you can’t afford to do it!”

A tall, broad-shouldered guy enters the dining room and, still standing, briefly joins the conversation. Alex Puninske transferred from Western to U-M this past January. His true love is music–he sings and plays guitar in two bands–but, under parental pressure, he’s majoring in physics, something his family views as more “practical.” He says his education is “almost entirely paid for by loans,” and he expects to leave school owing close to $100,000.

Like a lot of middle-class kids, he says his parents couldn’t afford the full “expected family contribution” schools deduct when calculating financial need. After the recession cut his father’s income from a managerial position in the roofing industry, his two younger brothers are still living at home and attending community college. He, too, is bitter about the loss of the Michigan Promise: “They took that away from my generation.”

Still, he’s glad he transferred from Western, and he believes that the cachet of a Michigan degree is worth the higher tuition–and worth working “twice as hard” on his studies. But part of him is impatient to be through: “The more I sit here,” he says, “the more debt I rack up!” A guy with obvious drive, he is pondering music-related careers–maybe sound engineering, or starting a record label with a friend. His parents have promised to help him, but even so, he’s not sure he can do it: “I really feel I have to make a lot of money or I’ll be trapped … paying those real heavy loans the rest of my life!”

Pioneer High grad Matthew Pennington, Denison University Class of 2007, has some perspective on that. He borrowed $30,000, and five years after graduation he’s still repaying $321 per month on his student loans.

In a phone interview from Cincinnati, Pennington tells me that he’s landed on his feet as a category analyst for the Boston Beer Company, maker of Samuel Adams. He believes Denison’s good reputation helped him find work in a cruel economy–in a previous job, with Coors, he was one of fourteen hired from 700 applicants–but even so, his debt hangs heavy.

“I’m getting married in October,” Pennington says. “We definitely want to have kids. [But] we’re going to have to wait a while–five to seven years–in order to decrease the amount of student loans.”

Kerene Moore works at the handsome brick house on Fourth Avenue that houses Legal Services of South Central Michigan. Better known as Legal Aid, it’s the place of first, and sometimes only, resort for people who are broke and need legal advice.

Moore arrives at our interview looking drained; she was on the phone for half an hour with a tearful undocumented immigrant she’s not sure she can help. “Sometimes, it’s tough,” she says of her job. But when she decided on law school, public interest commanded her attention–when she tried a couple of classes on corporate-related law, she says, she “was bored out of my mind.”

A friendly woman with narrow glasses, Moore owes $100,000 in law school debts. She talks calmly about the burden, but confesses that she’s had moments of near-collapse as she grapples with the confluence of work, debt, and single motherhood.

Moore attended Michigan as an undergrad on a full scholarship. In her senior year, she married a U-M engineering student and within a year gave birth to her older son. One reason she turned down the law school scholarship from Michigan State was U-M’s unusual “debt forgiveness” program. It’s complicated, but essentially U-M (where law school tuition is about $48,000 a year) will help if students go into low-paying fields like public interest law and have problems paying back their loans. But U-M will cancel the arrangement if borrowers default on their payments–and Moore did.

She skips the gory details, but essentially, her ex-husband has not worked for years and doesn’t pay child support. When she decided to end the marriage, she was three months pregnant with their second child. She has raised her sons, now four and ten, herself, with day care bills consuming a sizable chunk of her modest earnings.

“I’m between a rock and a hard place,” Moore says. Only after she filed for bankruptcy last spring did her situation improve, the non-student debts wiped out. Further, her younger son now is eligible for full-day kindergarten at public school. Relieved of the expense of childcare, she’s again able to repay $200 a month to the feds and just recently negotiated another $200 monthly payment to a bank. If she can continue making payments for several months, she says, there’s a chance U-M might again step in to help erase the debts.

Moore believes the law school wants to help its own but doesn’t know what to do with “non-traditional students. They’re used to dealing with twenty-two-year-olds, no kids, parents paying the tuition.”

Assistant law dean Sarah Zearfoss won’t comment on Moore’s story, but insists that it’s “completely inaccurate” to say that the school doesn’t accommodate less-affluent students, pointing out that 10 percent of U-M law students are the first in their family to go to college. Further, she says, “We do a great deal to help people get placed and supported if they want to go into non-traditional careers.”

Most significantly, the law school will make interest-free loans to students struggling with debt repayment. The program is run on a “sliding scale, depending on how much you earn and how much you have in the way of debt,” Zearfoss says, and the U-M loan can be forgiven after a year–provided the borrower continues to pay other lenders as required. Currently, about 150 law school grads are getting help from the program, Zearfoss, says, and “it’s extremely rare” for them to default.

Moore says that although she passed the Michigan law boards, she doesn’t yet have a diploma or a transcript from the law school–the university won’t release them, because she still owes tuition. She says starting to repay that debt is next on her list. And despite everything, she says, “I love U-M. When I was an undergrad, I used to walk around the Law Quad and think how beautiful it was.”

When I catch up with Cooper Stansbury two months after our first interview, he has, after sending out about 100 applications, found two part-time jobs, at Zingerman’s Deli and Moosejaw Mountaineering. Though he isn’t using his degree in the way he hoped, he feels like he is getting his life back. But he also has realized that to get a career he’ll enjoy, maybe teaching, he’ll have to return to school, and borrow more money.

But this time, when it comes to financial aid, he’ll be paying closer attention. Ruefully, he reflects, it was only in “the last couple of semesters I was looking at that [loan statement] and saying ‘Hey, that’s a lot of money!'”