Fresh alumni will be tossing their caps into the air this month and begin their post-graduate life, but student debt will trail behind them for years.
According to the Office of Financial Aid, Ole Miss undergraduate students who started as freshmen and took out loans for school, graduate with about $28,000 in debt based on students who graduated between July 2015 and June 2016.
This estimate includes federal loans such as Stafford Loans, Direct Subsidized and Unsubsidized Loans, Perkins Loans, Health Professions Student Loans, institutional loans, private loans, but excludes financial assistance from parents.
Junior Tabby Owens, 24, will have about $15,000 in debt by the time she graduates. She knows it will be more because she wants to earn a master’s degree one day.
She feels fortunate since the average amount of debt per student in the class of 2016 was $37, 172, according to the federal reserve website. And the 44.2 million Americans with student loan debt make up a combined $1.41 trillion in loans.
Then again, Owens has always been a fact and figures kind of girl.
“When I was 16, I got a job working for a tanning salon and fell in love with sales, but it wasn’t until my freshman year of college that I decided I wanted to major in accounting,” Owens said.
Owens said she has supported herself throughout college. It has motivated her to become financially savvy, especially when it comes to acquiring debt.
“When you are on your own, reality sets in,” Owens said. “Once I realized someone wasn’t going to catch me if I fall, I had to learn how to manage my finances pretty fast.”
Owens said it is crucial to learn how to budget in life.
“I have learned the importance of paying bills on time, and the most efficient ways to build credit,” Owens said. “Where credit is readily available it is easy to drown in debt.”
Owens said she worked hard to not take student loans out until she transferred to Ole Miss a year ago.
She also organized her finances so she will pay off her car loan before she begins paying her student loans.
“I am making sure I don’t overwhelm myself after graduation,” Owens said. “While in school, I pay the interest that my student loans are accumulating. I also keep close track of how much I spend and I use a budgeting app to ensure I see where my money is going every month.”
Owens already is building up her credit. She talks with her accounting and business professors to make smart money choices short term and long term. But she learned early from her parents what not to do.
“I learned from trial and error,” Owens said. “Seeing my family struggle gave me the drive to make sure I didn’t end up in the same position. I spent a lot of time reading about different ways to handle debt, build credit and invest so when I retire, I won’t have any issues with supporting myself. Dave Ramsey and other financial advisors have been God sends in teaching me the ins and outs of the personal finance world.”
Owens cautions other students not to make decisions without asking someone more financially savvy.
“It maybe exciting to have a new car, house or the extra $5,000 in the bank, but don’t forget that borrowing is not free,” Owens said. “When it comes to interest rates, pay attention not only your due date of your bills, but also the statement closing date. It may be hard to give up that extra margarita to pay over the minimum on your credit card, but ultimately you’ll thank yourself later.
Owens said the little things add up and show creditors that a student is responsible.
Although the cost of higher education has been rising in accordance with debt, some are worried about the Trump administration cutting student loan forgiveness programs.
Nataša Novićević, assistant director for loan administration, said she is not aware of any definitive plans to eliminate them.
The programs come in handy to students who chose expensive degrees, but low paying careers that benefit society. In the case of qualifying debtors, it can allow backed up loans to be wiped away so many years in the career field.
“Some loan forgiveness programs are used as strategic initiatives to encourage students to select certain careers, such as teaching, nursing, or law enforcement,” Novićević said. “When those kinds of incentives are eliminated, students may choose a different academic major because of the concerns about their future financial debt burden.”
Novićević said some other forgiveness programs are set up so that students who made on-time payments for a set amount of time, possibly 20 to 25 years, may have their remaining debt forgiven, which helps low-income graduates.
For all students who submit a Free Application for Federal Student Aid, qualifying Federal Direct Loan awards are included in their financial aid package.
Novićević said this is a way of showing students their initial loan eligibility.
Students may decline them or choose to accept all or a portion of loan funds.
“When students visit our office to inquire about additional options, our advisors try to understand the student’s financial needs and provide advising based on that information,” Novićević said. “In most cases, we will advise students and their parents to first exhaust all Federal Direct Loan options before considering private loan options because federal loans typically have more favorable terms and conditions, such as a lower interest rates and deferment options. However, each student and family is different and we encourage them to decide on the best loan option for their specific situation, even if it goes out of the order that we often recommend. Based on the information the students provide our advisors, there may be institutional loan funds offered as well. These funds are managed by our office and awarded to students with most financial need or those facing special circumstances.”
The financial aid website has a list of resources for undergraduate students as well as graduate students.
For undergraduate students who chose to borrow Federal Direct Subsidized and Unsubsidized Loans, depending on the grade level and a student’s dependency status, they may be awarded up to their annual loan limits.
Dependent students may borrow up to $5,500 for freshmen, $6,500 for sophomores and $7,500 for juniors and seniors, to the extent that they are eligible.
Novićević said because subsidized loans are need-based, the amount awarded is based on financial need and is determined by their FAFSA. She said the remaining amount up to the annual loan limits is awarded in unsubsidized loans.
For some loan options, students may max out their limit of financial aid.
Novićević said there are aggregate lifetime borrowing limits for both undergraduate and graduate Federal Direct Loans.
For undergraduate students, the limit is $57,500 and for graduate students, the limit is $138,500, which includes the undergraduate amount.
“It’s very important to only borrow the loans that you actually need to help with your educational expenses,” Novićević said. “There is not a limit for Parent PLUS and Graduate PLUS credit-based loans. However, staff may strongly advise against additional borrowing.
Novićević said undergraduate students are not expected to have very much credit, or any at all. So many student loan options do not require a credit check.
“We also encourage students to think about part-time employment while attending school, although students should be careful not to let work interfere with their studies,” Novićević said.
Novićević said she encourages students to apply for Federal Work-Study job opportunities and student employment options on campus that can be scheduled around class times.
“There are also employment options around town to consider,” Novićević said.
Senior Malachi Shinault, 22, will graduate in May with no debt at all.
“I think (attending community college first) helped a ton,” Shinault said. “Joining Phi Theta Kappa not only led to me having friends upon arriving to Ole Miss, but it also awarded me two scholarships, which offset the cost of Tuition a great deal.”
The Booneville, Mississippi native has studied integrated marketing and communications for the past two years after transferring from Northeast Mississippi Community College.
Shinault said with the scholarships he received, he has been able to pay Ole Miss without paying out of pocket.
“When tuition was paid, I used my refunds to pay my for apartment and other necessities,” Shinault said. “I’m incredibly relieved and proud to say, I have no school debt.”
Shinault said the cost of living in Oxford while in school did make him keep an eye on his spending.
“I would buy new video games or cool tech toys, now I actually consider how much money I have,” Shinault said. “I can’t tell you how many times a day I check my bank account information.”
He said he asked friends who were business majors about finances and attended a few special topic meetings involving life after college. He also read different websites to understand when loans are or are not needed.
“You have to balance it out,” he said. “Save as much as possible, never introduce loans into the equation unless it’s absolutely necessary. Apply for as many scholarships as you can. Read and educate yourself on the topic before the issue becomes overwhelming…the time and the resources are there.”
