reporting by Dustin Neill - interactive by Stephanie Bane and Eric Tegeler
Ins and outs of college debt
Most students have some amount of debt, whether that comes from student loans, private loans or credit cards. Whether they have hundreds adding up on their credit card bills or thousands piling up in student loans, most students face this in their college careers.
The average loan debt for graduates who took out a loan and graduated with a bachelor’s degree for 2006-2007 was $19,827, according to Robert Zellers, director of the Office of Scholarships and Financial Aid. Zellers estimates that 50 percent of Ball State students have some form of loan taken out.
For students at Ball State University and other colleges across the nation, college is likely paid for in one of three ways: the parents of the student pay for everything, the student takes out loans to cover the costs, or a combination of the first two. Zellers said if possible, students should take out one of the Stafford loans instead of private ones offered by banks.
The subsidized Stafford loan, which is based on need, is most desirable because the government pays interest on the loan while you are in school.
The next most desirable loan is the unsubsidized Stafford loan. This has a fixed interest rate of 6.8 percent, but students should at least pay the interest on it while in school to avoid debt growing out of control.
Students should stay away from private loans because the private organization can increase the interest rate whenever it chooses to, Zellers said.
Ball State sophomore Sam Householder appreciates his parents paying for his schooling because that allows him to concentrate more on his schoolwork. “I can just sign up for classes, go and get my work done . . . and I don’t really have to sit back and worry a ton about what my financial situation’s going to be next semester,” Householder said. His father set up a plan to pay for his son’s college because the elder Householder realized how difficult it was to pay for college and concentrate on classes when he was in school.
Ball State University freshman Patrick Fisher is paying his own way through school, and he sees some advantages of having to do so. “Having debt is obviously not the greatest thing in the world, but it does kind of make me want to apply myself a little harder than if [my parents] were just paying for everything because I’m paying so much money and going into debt for my education, so I want it to be something worthwhile.” Because of the debt piling up, Fisher hopes to graduate in 3 1/2 years.
Zellers offers these tips to students for avoiding an overwhelming pile of debt when they graduate:
Only borrow what is needed. Use the loan for tuition or housing, not for the latest version of Madden or a new DVD player.
Keep track of all expenses
Keep track of and try to minimize borrowing
Know payment options
Pay interest charges while in school if you must take out an unsubsidized Stafford loan or private loan
Go to the exit counseling upon graduation if you took out a loan to pay for school
Even if students don’t make as much money as they thought they would upon graduation, they still need to make loan payments. “They’re still going to have to make payments on those loans; they don’t go away . . . So you’ve got to figure out a plan to pay them,” Zellers said. Paying back loans might pose a challenge, but thankfully, there are some ways to make things easier.
