About a dozen students attended a Hawk Cent$ talk on March 30 to learn how to better understand their student loans.
Hosted by the Financial Aid Office, the talk, “Managing Your Student Loan Debt & Researching Outside Scholarships,” was led by Michael Maloney, financial aid specialist in the Financial Aid Office. Maloney’s presentation covered types of loans, repayment plans and tips on how to manage student loan debt.
While student loans may seem daunting to some college students, familiarizing themselves with the loan process earlier on can save students money in the long run, Maloney told the audience.
Danielle Ray ’25, who attended the talk, said her biggest takeaway from the presentation was learning about different types of loans and repayment plans.
“I found it surprising that most people pay their loans off in 10 years, and federal repayment plans last 10 years,” Ray said. “But you would need a plan.”
According to a 2021 report by the College Board, “Trends in College Pricing and Student Aid,” total education borrowing is down for the 10th year in a row. But loans still account for $95.9 billion in aid. Of that amount, about 87% is from some type of federal loan and 13% is from nonfederal loans, which include state and institutional loans and those issued by banks and credit unions and other lenders.
Jay Fleischman, a New York-based student loan lawyer who maintains “Money Wise Law,” a financial resource website, said paying for college “is probably the second-largest investment financially that an individual will make at this point, second only to the price point of purchasing a home and taking on a mortgage.”
“The average undergraduate gets their bachelor’s degree and has an average of $36,000 in student loan debt,” Fleischman said. “It may not sound like a lot but it is.”
Yet, most college students are not even aware of how much they owe in loans. In a 2022 Student Voice survey for Inside Higher Ed, of the 1,550 undergraduate student respondents who said they have student loans, one in five were not sure how much student loan debt they have, and nearly half were not sure what their monthly payment will be after graduation.
“What I have found is that many students don’t even know what the terms are, what the interest rates are, what the monthly payments are going to be when they graduate,” said Todd Erkis, visiting professor of finance. “I think the first thing is to become educated on what exactly you have. It’s hard to manage your debt when you don’t really understand it.”
Erkis, who is going to team-teach a new financial literacy course in the fall with Viktoriya Lantushenko, Ph.D., assistant professor of finance, said even though students may not know how much they are going to make after they graduate, they should still have a sense of what their monthly payments will be.
“If I’m in my sophomore year, and I’m going to borrow some amount, what’s the monthly payment going to be when I graduate?” Erkis said. “I don’t think many students do that. And I think that would be helpful if they put it in perspective how much they’re borrowing and what the actual obligation is going to be.”
Fleischman said students with private loans should be especially attentive to what loan repayment will look like after graduation.
“While you’re in school, it’s good to familiarize yourself with what your options are going to look like,” Fleischman said. “Once you come out of school and once you’re in repayment, the bigger problem there is presented by the private student loans, the vast majority of which require co-signers and guarantors, often parents, grandparents with income assets and credit scores, credit histories. They create the larger financial issue. With respect to federal student loans, it’s important to have an understanding of what the repayment options look like in broad strokes.”
One tip Maloney suggested during the talk was that students should pay the interest of their current loans, rather than waiting until after graduation, saving students thousands of dollars later on.
“[Pay interest in school] if you can,” Maloney clarified with The Hawk after his presentation. “I know there’s a lot of students that don’t have that ability or resources, I didn’t. If your family has the ability to pay on the interest, it avoids the capitalization. So at the end of the capitalization, you’ll have less principal.”
Ultimately, Maloney said student loan lenders can be a helpful resource in figuring out which repayment method works best. Loan servicers want their money and will work with students to help them make consistent payments, Maloney said.
“You can call them, work with them and they’ll work with you,” Maloney told the audience. “Trust me, they want their money. So in any way they can possibly help you to make sure you can make consistent payments, they’re going to do it for you.”
Fleischman said the more students know and understand about their loans now, the better off they are long term.
“I think that it’s important to have a plan to manage your student loans,” Fleischman said. “A plan that enables you to remain in good standing and to be able to live your life at the same time.”
