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Friday, January 21, 2022
Student loans: Debt sucks

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Student loans: Debt sucks

At 23 years old, a UW-Madison senior faces $30,000 in college debt.


The student, who asked to remain unidentified, used Federal Direct Subsidized and Federal Direct Unsubsidized Loans, formerly known as Federal Stafford Loans, to help pay tuition over the past five years.


 


""I am very happy that I was able to have the opportunity to be here at this university, and meet the people that I've met here and be able to do the work and be in the program and the classes,"" she said. ""It's been a great experience.""

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According to the data from the Office of Student Financial Aid, 5,550 college students graduated in the 1998-1999 academic year, 45.9 percent of them with debt. The rate rose to 48.1 percent of the 6,537 undergraduates in 2008-2009, the latest data available.

 

""I already have this huge amount of debt""

""I didn't read any of the literature before I took out my loans, just because everyone's going to college. They tell you, ‘everyone has to take out loans. You need this degree, so don't worry about it',"" the student said.

Her father took care of everything. He talked to the banks, he did the research, and he put a financial package in front of her, telling her it was her best option.

With her father's help, the application process went smoothly. She filled out and signed FAFSA without carefully reading the form, and quickly forgot the details. The application automatically transferred to the next academic year, so she did not see the necessity of figuring out the details.

She did not think about repaying her debts and instead spent all of the money she earned through a part-time job. She opened a credit card and racked up more debt. With graduation less than a year away, she has finally come to understand her debt; she must pay $200 per month for the federal loans in addition to her credit card debt.

""I am really scared, honestly. I didn't realize, and I think a lot of kids didn't really realize, that this is a huge deal,"" she said. ""I can't believe that I already have this huge amount of debt attached to my name when I am going to be 23 years old. And it does go to my credit report.""

Now she is trying to pay off the credit card debt as much as possible before she gets out of the school in May 2011. She is working 20 hours per week but is just able to cover basic living expenses.

""We try to discourage people from borrowing too much, and we ask them to consider living on less money,"" Susan Fischer, director of the Office of Student Financial Aid, said.

The Department of Education reported a national cohort default rate of 7 percent in fiscal year 2008. In comparison, the cohort default rate at UW-Madison was  0.6 percent that year, according to the Office of Student Financial Aid.

""Our students are doing a very good job of paying back [their loans],"" Fischer said.

At $850 billion, the total student loan debt has exceeded the total credit card debt in the United States, according to USA Today.

 

""It's debt you owe""

""I think the most important thing for students to understand is this is debt; it's debt you owe and it's not going to go away,"" Michael Collins, faculty director of the Center for Financial Security at UW-Madison, said. 

""You can file bankruptcy and you can get rid of credit card debt, but you cannot get rid of student loan debt. It is with you,"" he said.

""If there is a first-year student who has loans but hasn't thought about this and done the math of how much it is going to add up by the time they graduate, they need to do that right away. You can't just ignore it.""

The Office of Student Financial Aid offers assistance for students with limited financial literacy. The university's plans to further inform students do not end there, however.

Heidi Freymiller, the president of the Working Class Student Union, transferred from Madison Area Technical College. She said when she applied for her loans at MATC, the college's financial aid application workshop helped a lot.

In the workshop, Freymiller and other students each had access to a computer so they could do their financial aid application online. A financial aid counselor traveled from one computer to another to answer students' application questions.

""Just having someone there who can answer questions as I was filling out the form, and knowing that I can take care of this form right here and now, is really helpful,"" Freymiller said. ""It's not something that I have to come back to and worry about over the next three weeks, because there is someone here telling me how to do it, helping me with all the information I need.""

Fischer is trying to jumpstart a campus-wide strategic plan for financial literacy, incorporating various departments and offices, to help students understand and manage their debts as well.

""I think it will take at least five years to get that all together,"" Fischer said. ""It's one of my dreams.""

 

""I am just scared for this era to end""

""I have more debts than the average student who lives here, mostly because I have been in school so long; I've been moving forward slowly but surely,"" Freymiller said.

Now at the age of 30, as the mother of an 8-year-old daughter, Freymiller has more responsibilities than traditional college students in their 20s. However, life experience makes her confident in her ability to manage her debt when she gets out of the school and get a high-paying job that will allow her to repay the loan.

For younger students, however, facing debt payments after graduation may be more daunting.

""Looking back, I am not sure I would be able to advocate for myself if I had been in this place at 22 years old. I feel like my ability to do that has a little bit to do with my own life experience,"" Freymiller said.

In thinking about the future, the 23-year-old student is both ambivalent and cautiously optimistic.

""I am just scared for this era to end and to actually become an adult,"" she said. ""When one door closes, another one always opens. That's what my mom's told me. I think I will work that out. I think I will.""

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