Freshman Marti Pike applied for student loans in order to attend Harding. She said she understands that loans are a big responsibility, but that the benefits of her decision outweigh the risks.
“At the end of the day, if I didn’t go into debt, I wouldn’t be in college,” Pike said. “I want to be a doctor, and I know I need a degree to do that. That will make the money back and also give me the opportunity to do something that I love.”
Graduate Financial Aid Director Renee Bissell said students often allow their parents to take control of their loans while in school, which often leads to post-graduation panic.
“When you just let mom and dad figure it out, and you don’t really know what this means, that’s a dangerous thing,” Bissell said. “You need to know what this debt means for your future.”
Over half of Americans ages 18 to 29 have outstanding student loan debt, according to the Pew Research Center. At the end of June 2017, Americans owed more than $1.3 trillion in student loans. For many students, paying outright for a college education simply is not an option. Still, enrollment in four-year institutions continues to rise, according to the National Center for Education Statistics.
Bissell emphasized the importance of keeping a budget during school and after graduation.
“It’s very helpful to have an understanding of how money works and how debt works. I don’t think that students understand what the word ‘debt’ really means,” Bissell said. “They don’t seem to catch it until they get out of school, and they have to make their first payment. Then they’re scared to death.”
To better prepare for the future, Bissell said, immediately educating oneself about debt is essential.
“The biggest mistake students make is not being educated. People bury their heads in the sand,” Bissell said. “If you don’t pay attention, you can take on more debt than you need.”
Financial Aid Counselor Rigel Page encourages students to keep track of the loans they take on and look into payment options while they are still in school.
“Don’t borrow more than you have to,” Page said. “Know what your loans are. Sit down and look at how much you’re going to make and how much you can pay.”
According to studentloans.gov, understanding the difference between direct subsidized and direct unsubsidized loans is crucial. Direct subsidized loans, also known as Stafford Loans, accrue interest throughout college, which the U.S. Department of Education pays. Direct unsubsidized loans, also known as Direct Stafford Loans, are available to undergraduate students as well; however, students must repay all interest on this loan. Loan servicers provide a variety of payment options such as date-specific payments, plans customized to one’s income and loan consolidation, which combines loans into one monthly payment with a single servicer.
Page urged students to contact their lender with questions about repayment and consolidation of their loans, noting that students should think twice before deciding to consolidate.
“You can only consolidate one time,” Page said. “People think that if they consolidate to make one payment, it’ll be easier. Then something happens, and they can’t do that anymore because they’ve already done it. Wait to consolidate until you really need to. Most of the time, it’s not a benefit.”
The problem compounds when students pursue graduate school. Graduate schools usually allow students to take on larger loans, which can make repayment more difficult in the future, according to Bissell. A graduate student should be extremely careful about what they spend, especially if they are already living entirely on loans.
“Don’t go buy a new car and expect to pay for it with loans,” Bissell said. “Think about even your everyday life. A $5 cup of coffee is not a $5 cup of coffee, it’s that cup of coffee times the interest that’s accruing on it for the next four years.”
Students should also take note of loan forgiveness programs, such as the public service loan forgiveness program and the teacher loan forgiveness program. Students employed at governmental organizations or non-profit tax-exempt organizations may qualify for public service forgiveness programs.
Alumna Audrian Harville, a fourth grade teacher at Landmark Elementary School in Little Rock, qualified for teacher loan forgiveness. Students in education programs can qualify for the TEACH grant, a loan forgiveness program that offers up to $4,000 a year to teachers who work in high need fields of low-income schools for four years after graduating.
Though Harville is involved in a loan forgiveness program, she spoke to the impact student loans continue to have on her life.
“I wish I had known how much of a burden they are. Loans can be debilitating,” Harville said. “Our society has changed … it is seen as a necessity for success, but the cost is astronomical.”
Still, students should not forego a good education due to fear of debt, according to Pike. Instead, they should treat the decision like a personal investment.
“When you invest in college, you’re investing in yourself and your abilities,” Pike said. “If you work hard, it will pay off. As soon as you start investing in yourself, you start to accumulate better opportunities.”
Sophomore accounting major Jackson Acuff said student debt affects several aspects of life, including a future career.
“Don’t ever be late on your payments,” Acuff said. “If you’re a business major, and when you go to apply for a job and that company sees that you have a bad credit score, they’re not going to want to hire you. Student loans impact your ability to get more loans, rent an apartment, buy a house and even get a job.”
According to senior management information systems and international business double major Julia Bergeth, it is important for students to realize that they will have to live below their means once they graduate.
“You’re starting your post-grad life with debt, so don’t plan on living the way your parents live as soon as you graduate,” Bergeth said. “They are were able to afford that lifestyle with a greater amount of income, while you will be having to pay off whatever amount you owe.”
Bergeth also discussed the importance of paying more than the minimum requirement each month.
“Pay off your student loans as quickly as possible,” Bergeth said. “Don’t just make the minimum payment each month, pay more than that so you’re not paying more interest.
There are resources out there to help students manage their student loans; but, according to Bergeth, doing what you can to start paying them off now will make it easier on yourself in the future.
“Educate yourself. Always educate yourself,” Bissell said. “Get out of debt as fast as you can … then you don’t have to worry about it. … It’s well worth just being in pain for a little while and not having that house, or not having that new car, and being done with it. You have to make sacrifices.”
For more information on student loans and financial aid, contact Harding’s Financial Aid Services at firstname.lastname@example.org.