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Student loan debt, which has soared past $1 trillion, has taken center stage in the minds of students, parents and now financial aid officials.
“What I’ve noticed a change in is people want to talk about debt. In the past, people were like, ‘This is my dream, we’ll figure it out later, and [debt] is a short-term band aid. [Now] they want to be more educated about strategies and financing,” said Carly Eicchorst, the associate director of financial aid at Augsburg College in Minnesota in an interview with US News.
Many prospective students raise questions about the debt they will have to take on in order to attend college. At Eckerd College in Florida, many potential students inquire if they will be forced to take on $100,000 in student loan debt in order to attend.
“When we talk with students, we try to figure out, ‘Where are you getting that figure?’ It’s, ‘Well, that’s what I heard’,” said financial aid director Pat Watkins in a US News interview.
Despite student concerns, the majority of students do not acquire six figures in student loan debt. In fact, according to a financial aid analysis, from 2007 to 2008, only 0.2 percent of undergraduates acquired six figures worth of student loan debt.
Students that get into substantially higher amounts of debt usually do so as a result of extenuating circumstances such as school transfers or a lack of parental contributions.
Borrowers that obtain private loans are also tend to be more heavily in debt compared to those that only borrowed federal loans. This is because private loans lack the limits and regulation that accompany federal loans.
“We explain what the monthly payments will be, as well as explain to them what the potential for cancellation of their loan will be if they’re going into nonprofit sectors. It’s basically saying, unless you’re borrowing privately…the students won’t [owe] $100,000,” said Watkins.
Despite assurances that the average student will not need to borrow six figures in order to obtain a degree, it remains important for prospective students to research prior to borrowing.
Some colleges are trying to help students with this research process.
“There is much more emphasis, not only in the financial aid office but in our orientation programs and in our first-year seminars for them to be good financial stewards—so they’re not borrowing more than they have to. We try to work with them from the beginning—and it’s not just the student, but it’s also the family. Through our orientation program, we work with parents and students so that they understand what the ramifications are of decisions…including borrowing,” said Phil Conroy, school president at Vermont Technical College in an interview with US News.
With financial anxiety high on the minds of many students, proper due diligence, such as research on majors, student loan debt, college costs and post-graduate salaries can help allay the fears of borrowing.
“I don’t know if this year was just an anomaly because there was so much chatter about student loan indebtedness, [but] students are being much more diligent about their borrowing. They are actively seeking outside scholarships that they can use to replace student loans, and some students will say, ‘No, I can’t afford to come.’ I think they’re being more realistic,” said Watkins.