Avoiding college debt; Can it be done?

First Posted: 6/12/2014

LIMA — It happens so quickly.

A few weeks ago, the Class of 2014 was celebrating – high school graduates ready to conquer the world. Many are now enjoying a summer of fun before heading off to college, where hopes and dreams take them on a journey like no other.

If all goes well, four to five years from now they will begin a new career.

All of this would be a Norman Rockwell moment if not for one detail: nearly 70 percent of these students will also graduate from college in debt to the tune of $30,000 or more, according to conservative projections.

It’s a growing concern that attracted the attention of President Obama earlier this month and one that college financial officers will be trying to drive home to new students and parents during orientation sessions throughout the summer.

Josh Luke, the assistant director of financial aid at The Ohio State University at Lima, said the school encourages students to make appointments in the financial aid office. New next year is a financial wellness program that offers free electronic financial counseling for students.

Melanie Weaver, Ohio Northern University’s director of financial aid, said, “Borrowing is something every family needs to be cautious and aware of.” The financial aid office holds sessions to talk about repayment options for students and encourages students to come into the office to talk about their finances.

In addition, Weaver said the university recently began requiring students to make an appointment to discuss their finances if they change a major or add a major or minor, anything that might extend their time at Ohio Northern.

Lawrence Matthews, director of financial aid at Bluffton University, said students attend programs about finances and loans during their orientation. There are also optional sessions for students throughout the year.

A more unique requirement, Wendell Schick, financial aid director at the University of Northwestern Ohio, said that all students have to take a first-year experience course, which addresses personal financial management.

In addition, federal loans require entrance counseling for first-time borrowers so that they know their obligations upon taking out a loan.

Daily Finance offers 15 financial tips to college freshman on their website. The recommendations include sticking to a budget, avoiding unnecessary expenses, saving, only borrowing the minimum they need, using coupons and setting spending limits.

OSU will be starting its third year of a tuition freeze in the fall, which is an attempt to keep college affordable for students. Luke said that OSU-Lima, with a tuition of $7,140 for a full-time undergraduate student, costs about $3,000 less than the main branch. Luke said that it also gives out about a half a million dollars in scholarships every year.

UNOH does not have a tuition freeze, but, according to Schick, tuition has only been raised three times in the past nine years. It currently costs $205 per credit hour for the Colleges of Business, Health Professions and Occupational Professions, Shick said.

Weaver said that at ONU, they have the Ohio Northern Promise, introduced last year. The promise includes a 20- to 25-percent reduction in tuition and a four-year guarantee for most programs.

Tuition at ONU can range from $25,350 for first-year law and continuing law to $33,050 for pharmacy. Weaver said that last year the university gave out more than $60 million in financial aid.

“You can buy a new car or you can get a four-year degree…but you’ll get a lot more out of the degree then you will a car,” Luke said.

At Bluffton, undergraduates will pay $14,433 this coming school year in tuition, according to their website.

Education, Matthews believes, “gives students the opportunity for preparing not only for their first career, but their second or third career.”

Students can save costs going to OSU-Lima for at least a year. The campus offers classes for at least one year of any of OSU’s majors. The Lima branch also has nine four-year programs.

Schick believes that UNOH is one of the most affordable private institutions in Ohio. In addition, during the last school year, Schick said UNOH gave $14 million in scholarships and grants.

“Value relates to more than money. The value to being able to be employed in a career that you enjoy for the rest of your working life is immeasurable,” Schick said.

Earlier this month, President Obama invited Tumblr founder David Karp to the White House to interview him about education and college affordability. Karp used questions that Tumblr users posted prior to the interview.

Obama cited one of the causes of raising tuition to be declining state support, forcing schools to raise tuition. The average student has $30,000 in debt, Obama said.

“It continues to be a very smart investment for you to go to college,” Obama said in the interview. The interview happened right after Obama announced plans to make income based repayment available to students who took out loans before 2011, when income based repayment was passed. At the time, income based repayment only applied going forward, not retroactively.

Income based repayment is when students in low paying jobs can cap repayments at 10 percent of their income and, if the student goes into one of the helping professions, have their loans forgiven. Obama hopes that by the end of next year that this program will be available for those who took out loans before 2011.

Obama believes that colleges and universities need to council students on their way in so that students will make smart decisions about loans.

“I think you have to be mindful of it always,” Weaver said.

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