Graduation is a day that every student looks forward to. It is the culmination of four-plus years of hard work and determination. Some will move on to the workforce and others will continue their education, either at their alma mater or at a new institution. Regardless of what they choose, something follows many Grand View University students off-stage when they get their degree: student debt.
It’s no secret that college can be expensive, and unless students saved up or have already figured out a way to pay their bills in full, they have likely taken out some sort of student loan during their time at GVU. According to the United States Department of Education’s College Scorecard, 71% of GVU students have taken out federal student loans, and they’re not in the minority. A report by the Federal Reserve says that 43.5 million Americans have used student loans to pay their way through college.
While it might seem like paying back student loans is a daunting task, there are plenty of resources to help lessen the financial burden. One of those resources is located right here on campus.
The GV Complete department has been helping Vikings navigate the cost of college since 2014. Dani Gronek and Laurie Butz are two completion coaches students can turn to if they need help navigating this uncertain terrain. Some students may be familiar with GV Complete if they were paired with a completion coach at the beginning of their education journey at GVU.
Butz said that GV Complete helps give students a degree of predictability.
“Their costs are locked in year one and then increased by 2.5%. That way they can know before they start what the costs are going to be, and then give them an estimate of their projected student loan debt, and most importantly, what their payments will be after graduation,” Butz said.
GV Complete says that the average GVU student debt is just above $30,000, which is down about $8,000 from when the department was started back in 2014.
Debt is not equal across all students, though. At colleges and universities around the country, huge disparities exist that put certain ethnic and cultural groups at a disadvantage.
A report from the Student Borrower Protection Agency states that 90% of Black and 72% of Latinx students take out loans to attend college. This is higher than their white peers, 66% of whom take out loans.
Additionally, Black students accumulate around 50% more debt than white students. When it comes to paying debt back, the report claims that 20 years after graduation Black borrowers still owe 95% of their original debt. In contrast, white borrowers have paid down 95% of their original debt by this time. 12 years after graduation, Latinx borrowers still owe around 83% of their initial loan balance, while white borrowers still owe around 66% of their original debt.
Butz says that she sees differing financial constraints all the time when students come to GV Complete for help.
“I’ve always said that our job is a rollercoaster. You know we have some families that come in and they’ll just be able to pay the remaining balance, and then some will come in and struggle to pay 2,000,” Butz said.
Right now, many organizations are advocating for student debt relief. Most recently, the Biden administration tried to forgive $20,000 of debt for Pell Grant recipients and $10,000 of debt for non-Pell Grant recipients through a one-time debt relief discharge.
Students are eligible as long as their median household income falls below a certain threshold: $125,000 for individuals or $250,000 for married couples or heads of household. GV Complete says that many students at GVU take advantage of federal Pell Grants to help lessen the cost of college, so this loan relief would benefit many in the student body.
The Biden administration claims that they have the power to discharge student debt through text in the Higher Education Relief Opportunities for Students or HEROES Act of 2003. The specific language states that the secretary of education can “waive or modify any statutory or regulatory provision applicable to federal student loan programs if the Secretary deems such actions necessary.”
When the White House opened applications for student debt relief, it claimed that 26 million Americans applied or were automatically eligible for one-time relief.
The issue divided Americans and prompted six states, including Iowa, to sue the Biden-Harris administration and stop their relief efforts. Some complaints stemmed from the belief that college students attend school and take out loans without planning to pay them back.
However, Gronek says that this is nowhere near the case. In fact, how much one can borrow is capped: $27,000 for a dependent student. Despite the misconception, students generally are not borrowing hundreds of thousands of dollars.
Much to the chagrin of many college students, loan relief efforts were struck down when the lawsuit that Iowa joined in on advanced to the Supreme Court.
Luckily though, if their career allows, students can take the long way towards debt relief by using both the Public Service Loan Forgiveness Plan (PSLF) and the Income-Driven Repayment Plan (IDR.) According to the U.S. Department of Education, 1.7 billion dollars of relief was given to 29,700 borrowers through fixes to the IDR. Additionally, 3.2 billion dollars of relief was given to 43,900 borrowers through the PSLF.
So how can college students take advantage of these programs? First, they need to switch to the Income-Driven Repayment Plan.
To do this, there are a few steps. “You have to certify what your income is with your loan servicer, for them to determine then based upon your income, what your payments would be towards your loan repayment,” Butz said.
The next step is finding a job with a company that qualifies as a 5013(c) or non-profit corporation. The good news is that many actively hiring companies are non-profit corporations. If students want to check if their employer qualifies for the PSLF, all they need to do is go to studentaid.gov with their employer’s Employer Identification Number (EIN). That number can be found through a simple Google search or on the student’s W-2 form for the year.
Both Gronek and Butz say that the IDR is a great way for students to save money if they are struggling to repay their student loans, but it is not a permanent solution. This is due to the way that the IDR works and the time it takes to pay off the loans.
“Even though it looks like you’re paying less and that looks great, you’re paying significantly more over time with the interest,” Butz said.
Though this seems like a significant downside, Butz made clear that it was simply something that students should be aware of.
“It’s a great option if needed to make sure that you stay in good standing with your loan servicer so that you don’t go into default,” Butz said. “But if you can start in that standard 10 year plan and you can make those payments, that’s the best for you.”
For students who might not want to or cannot to pursue a career in the non-profit industry, Gronek and Butz also had some tips for how they could pay off their loans on time and stay in good standing with their loan servicer. The first step is being proactive.
“A lot of students think you have to wait until the grace period is up to start making payments. We have a lot of students that have started paying their interest while they’re in school so that when they graduate, that hasn’t accrued and compounded during the four years,” Butz said.
Another important piece of information is to try and pay above the minimum payment each month and make more than one payment if possible. When students pay their loans, their loan servicer will give them the amount that they should pay each month, or their minimum payment. When students go to pay, their loan servicer will apply the amount to the interest on the loan, not the actual loan balance. So, if students pay over the minimum or make an extra payment, that will go toward the actual loan balance.
Finally, Gronek and Butz say that it is always important for students to stay in contact with their loan servicer. They should always notify them of a change of address or a change of financial status. If students need to switch between the IDR and the 10-year plan they can reach out to their servicer for help.
GVU has plenty of on-campus resources to help students navigate these next unfamiliar steps together. Loan help is available at GV Complete and the Career Center can help students find a job so they can enter the workforce and start paying back their loans.
Understanding these resources is half the battle, and if students work to use what is available to them, they may feel less stressed about their debt. Sometimes, the most important thing that one can do is take a breath and realize that they are not alone and help is there when they need it.