Student Loans

Student loans is a $1.4 trillion problem in America since 2012. According to an article written by Abigail Hess for CNBC, 60 percent of student debt will not be paid off until the person will reach their 40s. A study done by OneWisconsion Institute found that it takes an average person 19.7 years to pay off loans accumulated while obtaining a bachelor's degree.

With these stats in mind, it's important for students at Wartburg to keep in mind what they are taking out in loans and how they are going to pay them off. Jen Sassman, the director of the financial aid office, said that it is important for students to understand their financial aid package and pay attention to the amount of loans taken out each year.

“They should be conscious to only take out loans when it is absolutely necessary,” Sassman said. “If they happen to borrow more than what they need, then they should either return some of the loan money to the lender or save it to to pay for future educational expenses.”

Assistant professor of accounting, Justin Crouse, said that it is important for students to know what their loan payments are going to look like. A problem that he has seen among students is the lack of knowledge about what their loans are going to look like and then being surprised once they receive their first payment.

“If we’re not careful, we can get to a place where we can’t really afford what our payment is going to be and thats a significant thing that will hang over our heads for a long period of time,” Crouse said.

Crouse said that it's important to know what the loan payment is going to look like and keep track of what the student is putting on his or her bill. It's important to only borrow what is absolutely needed because whatever money is borrowed is going to have to be paid off in full plus interest.

It is also important to note that depending on a loans interest rate, it can add between $6,000 to almost $12,000 in a ten year period on a $30,000 loan according to an article published on Creditable.

It's important to look at the type of interest that different loans have. There are certain loans, such as subsidized loans, that do not gather interest while a student is still in college.

To avoid having to pay a large amount of interest, a person can pay more than just their required loan payment each month. Any additional funds that a person can spare to go towards loan payments can affect how long it will take someone to pay off their loans.

“The more aggressive they {students} are at repaying loans in the beginning, the more they are apt to save,” said Sassman.

Crouse said that doing research on a students future career salary and then factoring out their standard of living, can help determine how much he or she can put aside for loan payments each month.

“Set up a real quick budget and see if it is even feasible and if it’s not you really need to think hard on how to minimize those things,” Crouse said.

The Wartburg Financial Office sends students indebtedness information to students each June, keeping them aware of their federal and private loans as they go through college.

There are also loan payment forgiveness programs that students can apply for based on their financial situations.

“The standard repayment is often most effective in terms of paying loans off sooner, however there are repayment options available based on income if the standard repayment is too challenging,” Sassman said.

Of course there are other ways to pay for college besides taking out loans. Scholarships can help students avoid having a lot of debt in the future.

“There are all kind of scholarships out there that get very, very, very few applicants,” Crouse said. “Take the time to fill out the application or send in some grade evidence or write an essay. Make sure you know what is available to you.”

Crouse said that working over breaks or during the school year and saving that money to pay for tuition can help reduce the amount of money that a student needs to borrow each year.

Originally published in the Wartburg Trumpet.