According to the Institute for College Access and Success, the average student graduated with $30,100 of debt in 2016. This number is up four percent from last year, and is part of the larger trend we are seeing in increased student loan debt associated with rising costs of college.
Perhaps even more worrisome, many millennials seem to be lacking a basic understanding of how to pay off their student loans, which can turn their manageable balances into crushing loads later on (thanks, compound interest).
Forbes recently surveyed millennials about their student loan debt, and the results were staggering. Of the respondents, 45 percent said they did not know what percentage of their salary went towards paying their loans, 37 percent did not know the interest rate on their loan, and 59 percent did not know how long it would take for them to be debt-free.
The interview
With the rising costs of higher education, lacking information about student loan repayment is simply not an option. Fortunately, schools like Miami University offer students excellent resources to help them effectively manage their debt. In order to learn more about these resources, I sat down Brent Shock, the Direct of Student Financial Services, who had some great information for students with debt.
This interview has been edited for brevity and clarity.
So I’m wondering what resources Miami University offers to students to help them manage their student loan debt.
“First, I want to frame the topic as it relates to Miami students. If you go on the Project on Student Debt website you can see how we compare among Ohio schools and other states. Our average student loan debt is $31,000, and for most Miami students, this means that they will need to make $300 monthly payments on a standard 10-year payment plan, which is very doable for most students. Our average starting salary for graduates is around $45,000 to $50,000. Only 53 percent of our most recent graduates had student loan debt, which is also below the national average.
Every [Miami] student can look online and track their debt through a program we developed with IT services. If students go to www.miamioh.edu/knowbeforeyouowe, they can login using Miami authentication, and see where their current debt is, project what the monthly payments would be, and what the total cost would be on several payment plans. There are links and resources on this website to help students know what they should borrow.”
This seems like a good place for students to start. Do you have any personal advice you would give students as they begin to take out student loans?
“First of all, students need to carefully monitor their borrowing. They also need to make sure they are not over-borrowing. Finally, students need to consider the amount of their overall debt, compared to their intended profession. For example, students who graduate with $30,000 of debt who are hired as accountants will be making significantly more than those students who are interested in education or social work. These are important factors to consider, which is why we like to be having conversations with students every step of the way, to make sure they really understand what student loan debt will mean for them specifically.”
I know I get sticker-shock when I see numbers like $30,000 or higher being discussed as potential post-graduation student loan debt. Do you have any advice for students who might be scared away from attending college based on their initial reaction to these numbers?
“Well, these students need to understand that student loan debt is what I would call a good debt; meaning it sets you up for future success. If you are choosing between no debt and no education, or some debt and education, you need to consider the facts that the median weekly income is $450 higher for people with degrees than for people without degrees, and the unemployment rate is four percent less for people with degrees. These are opportunity costs people who are scared of taking on debt need to consider.”
Do you offer resources to students after they graduate to help them continue to effectively manage their debt?
“Yes, before students graduate, they are encouraged to meet for exit counseling. During these sessions, we provide information on all of their loans and the various mechanisms they can use stay in touch with Miami University about their loans. My biggest advice to students upon graduation is to not ignore debt. If students graduate without a job right away or are worried about making payments, they can work with loan officers here to find federal programs that will allow them to deter payments and keep these loans in check. We like to have conversations with students every step of the way to make sure that they know exactly what student loan debt repayment will look like for them, and how they can stay on top of it.”
The optimistic way Mr. Shock discussed student loan debt was insightful and reassuring. While the rising cost of higher education is a major issue for millennials, schools like Miami University are doing all they can to ensure that their graduates are able to afford an excellent education and still manage their debt effectively.
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