Mounting student debt calls for greater care

David Delgado/The Daily Cougar

It’s the start of the new semester. UH students rush into the bookstore between classes to find the line has reached an unmentionable length; new students walk along with their phones held closely to their faces as they study the class schedules they haven’t memorized yet. With all the stress of the start of the new semester, some students cannot help but look forward to the end of their last semester at UH.

For those who are now in their last semester of classes before graduation, congratulations. The world is your smelly oyster. For those who are far from graduation and are losing their sanity, remember one thing: crippling debt awaits you after college.

Debt is the sometimes-forgotten but constantly looming figure that breathes down our necks. Unfortunately, this money-grubbing mouth breather typically stalks students for years after graduation.

Although students do not have to begin paying back loans until six months after college graduation, the interest on these loans is enough to make a desperate student briefly consider selling a kidney.

One might believe knowing that other students suffer through this same ordeal would make it seem more manageable, but it doesn’t. Students know that they can count on paying back their loan for 10 years after graduation.

Therefore, it is no surprise that in 2013, bizjournals.com reported that student loan debt totaled almost $1 trillion, greatly surpassing auto loan debt of $783 billion and credit card debt of $679 billion.

The rise in student debt can be attributed to a number of factors that include the high unemployment rate, reduced job opportunities and the great rise in tuition costs. As for the rise in tuition rates, if more schools would implement tuition freezes, this would help reduce loan debt.

In addition, most students also struggle after college because of lack of planning. Naive young adults expect to step out into the world and immediately be awarded with a job in their field with a five- to six-figure salary.

According to The Washington Post, only 27 percent of college graduates are able to get a job pertaining to their major after graduation, while 62 percent of students are able to get a job within their degree. To further add salt to the wound, this percentage is even lower for students who pursue a degree in liberal arts — such as myself.

The stressed reader may now be wondering whether he should simply cut his losses now. Maybe it’s time to ditch school, drop all responsibilities and escape to the wilderness to live off roots, berries and such things that do not gain interest or require taxes. Maybe after avoiding multiple debt collectors, a life-changing epiphany will manifest into a clever and controversial New York Times best-selling novel. Finally, after becoming a millionaire and paying off all college loans with interest, it’s time to travel the world and have many adventures.

Unfortunately, now is not the time to fly off the handle. Now is the time for preparation. There are a few options to help the college graduate avoid the piles of debt that shortly follow the walk across the stage.

Personal financial planning professor John Lopez believes there are ways for students to greatly reduce their loan debts. These options include being mindful of money, as well as actively searching for alternatives to loans.

“Students don’t really think about other alternatives to student debt. Alternatives can be scholarships, grants, part-time jobs and internship opportunities,” Lopez said. “A lot of these scholarships go unclaimed because they might require an essay, some additional work or the student really would have to go look for it. Unfortunately, students don’t really want to take that initiative.”

Lopez also suggested that a great deal of financial debt can be reduced simply by accepting only as much money as is necessary to attend college. While this may sound somewhat obvious, students are often approved for large amounts of loans from various financial services.

Instead of accepting only the amount needed to pay for tuition, room and board and books, students often accept the full amount of the loan offered. Ultimately, students end up spending this extra money on unnecessary purchases because they do not have to produce the money themselves.

To prepare for the impending payments, students need to create a budget. If one is unsure of how to manage money and create a budget plan, the C. T. Bauer College of Business offers a class that is available to all students — Introduction to Personal Finance — to teach students to properly handle finances. Bauer also has an online version that can be found at the school’s website.

Hotel and restaurant management junior Diontrice Gill is no stranger to budgeting. While she has taken out two loans in the past, she is currently paying for college out of pocket by working two jobs.

“I think it’s worth the sacrifice now to be able to have my degree later in life,” she said. “It is possible (to graduate without debt) if you don’t mind working hard to achieve it. If you only want to attend college to receive refunds, you may find that you are digging a big debt hole for yourself.”

In the end, paying for college debt after graduation does not have to be something to fret about. With proper planning and hard work, the debt waiting for you can be greatly reduced.

Personally, I might still have to sell an organ to pay for college, because I didn’t start being financially frugal until last semester. However, at least I would be able to sleep soundly at night with the hope that a freshman reads this article and becomes more conscientious.

Senior staff columnist Kelly Schafler is a print journalism junior and may be reached at [email protected]

Tags: budgeting, student loan debt