The load that students carry on their backs isn’t just their backpacks. It’s mounting student loans.
According to student aid Web sites FinAid.org and FastWeb.com, student loan debts total $850 billion. A July report from the Federal Reserve said that credit card debt totals $823 billion.
Diana Galvez, senior nursing major, said that she wasn’t surprised that student loan debt is higher than credit card debt.
“I’m pretty much going to have to pay my loans for couple of years,” she said. “In the end, it’s worth it because in the end you get the career that you want. It’s a little sacrifice to get there.”
April Halaychik, assistant director of loan operations and manage-ment in Enrollment and Student Services, said that while the numbers may sound discouraging, responsibly-borrowed student loans can benefit students’ futures and are more profitable than credit card debt.
“If you use your student loans wisely, they can increase in value in that you’ll be able to pay for an education and get a job with which you’re able to pay off those loans and make an additional amount of money,” she said.
On the other hand, Halaychik said that the right way to use credit cards is to pay the bills before the end of the payment cycle in order to build credit. However, most people don’t use them this way.
“A credit card is, generally, bad debt,” she said. “It’s actually a better thing to have student loan debt versus credit card debt if you had to have one or the other.”
Caitlyn Carney, sophomore athletic training major, said that she doesn’t regret having student loans even though she doesn’t know how she’s going to pay them back.
“I’m going to be able to do what I want because of my loans,” she said.
Halaychik said that while a part of the increase in loan debt is due to increased tuition, many students borrow more than they need.
“When you see the harsh stories in the news where students are in a position where they can’t afford to buy a home after they’ve gone to school and gotten their degree, if you really delved a little deeper, you’ll see that they took more than they needed,” she said.
Halaychik said that, generally, students who take out loans will either get a subsidized or an unsubsidized federal loan. Subsidized loans are based on need. A student who is dependent on a parent’s income will not qualify for the loan if the parent’s income is significantly high.
“Subsidized does not accrue interest while they’re in school,” Halaychik said. “The thing with the unsubsidized loan is that the interest compounds quarterly, so by the time the student graduates they have not only what they borrowed due, but already have that compounded interest due so it’s really important for students to know the type of aid that they’re borrowing,” she said.
Halaychik said she recom-mended that students use private loans offered by banks and only use student loan agencies as a last resort because federal loans have more benefits.
“They’re [private loans] not regulated like federal loans are, so a lot of times the interest rates can be 18, 20 percent. It gets a lot more expensive,” she said. “They’re based on credit. The worse the credit, the higher the interest rate and the more it’s going to cost the student.”
Halaychik said that her advice to students is to live like students while they’re in school, so that they do not have to live like students for the rest of their lives.
“Figure out what you really need and only borrow that and send the rest back, decline the rest. Otherwise, you’re going to be in a tough situation when you get your degree,” she said.
