Earlier this month, seniors received their Federal Direct Loan exit statements. The average indebtedness of soon-to-be graduates, who borrowed Federal Direct funds and followed a traditional four-year program, is $25,805.
A decrease from last year’s average of $26,542, this number includes Federal Direct Subsidized, Federal Direct Unsubsidized, Federal Perkins, and Federal Nursing loans.
Included in this year’s average is senior Nathaniel Powell, who will graduate with a student loan debt principal total close to $100,000.
“I don’t think education has a monetary value, but it seems as though society has attached a price to it,” said Powell.
Having attended Baldwin Wallace for one year and Capital for three years, he borrowed $26,906 in Subsidized and Unsubsidized Direct Stafford loans, while his mother took out $82,941 in PLUS loans.
Director of Financial Aid Susan Kannenwischer said her department does not maintain an average private student loan debt, nor does it factor what percentage of student loans is paid off by parents and which is paid off by the students themselves.
Assuming parents are not fronting their children, the biggest hurdle for students is making their loan payments a non-negotiable part of their budget.
For students entering the “loan repayment maze,” Kannenwischer recommends consulting the exit interview material, contacting their loan servicers, or using SALT, a free online educational program that helps students manage their finances and loans.
Growing up with an accountant for a mother, Powell is not worried about budgeting correctly.
“I frankly don’t give two shits,” said Powell. “But, when I was at dinner with my mother, she was really saddened by me being saddled with debt so early in my life.”
Powell is not sweltering in debt alone.
Senior Jennie Pabst’s loan debt is closer to the average, totaling around $25,000.
“I’m not that concerned because I know we’re all buried in debt,” said Pabst. “…but did you ever play [Game of] Life as a kid and borrow money to go to college? In real life, it’s terrifying and definitely not as fun; I can’t pay this debt off in two rounds.”
Around the same time seniors received their exit loan statements, President Obama, in response to rising student loan debt, introduced the Student Aid Bill of Rights to a stadium full of students at Georgia Institute of Technology. The plan calls for all students to have access to quality, affordable higher education; affordable repayment plans; and a centralized complaint system.
As it stands, very few excusable reasons for defaulting on one’s loans exist, said Kannenwischer. But, unlike with mortgages and car payments, options that can help student borrowers avoid default include:
- Forbearance—Borrowers have the option to take up to three years off from making payments.
- Income-Based Repayment—If a borrower has lower income, payments can be made affordable based on his or her income.
- Extended Repayment Terms—Borrowers can stretch their payments out for up to 25 years instead of the standard 10 years to reduce the payments.
However, any program available comes with an increased amount of interest, said Kannenwischer.
Loans are forgiven only if a borrower is declared permanently and totally disabled. A borrower’s death, granted there is no co-signer on the loans, would also lead to a full cancellation of the debt.
Seeing as Powell’s mother took a life insurance policy out on him, Powell said he wants to give priority to the loans taken out in her name.
But, with his Stafford loan bills coming in 60 days, Powell must start paying $800 a month in order to meet his 10-year plan.
Luckily, these loans can be deferred up to six months.
“It seems as though my diploma has turned into a debt collection notice,” said Powell. “I have freed my mind in a sort of way, but I sold my soul in a way…If I believed in souls in the first place.”
Asked if he believes his education is worth $100,000, Powell said he doesn’t think of education in terms of money. But, because of this culminated debt, he decided against going to grad school.
Thus, Powell, a political science major who had planned on receiving his masters in political theory, said he will jump on any job opportunity.
Currently, Powell works as a bartender for a wedding and banquet hall. Over the past couple of months, he has applied to be a bus driver for the Central Ohio Transit Authority (COTA) and a building caretaker for a church.
“I would like to not be a pencil pusher…, but you’ve got to do what you’ve got to do,” said Powell. “My area wasn’t really politics…but the tactic I’m taking when I’m applying for jobs is to just throw out a bunch of applications and see what comes back. I’m turning my application into a form letter.”
