The facts about NCF students and student loans

A report by Peterson’s Undergraduate Financial Aid and Undergraduate Databases showed that in 2009, 41 percent of New College students graduated with an average debt of $14,794. The same report stated that 48 percent of Florida State University students in 2009 graduated with an average debt of $19,364 and 41 percent of University of Central Florida students who graduated in 2009 left with an average debt of $17,044. New College graduates have less average debt than many other Florida institutions of higher education but there are many precautions that can help lower the final payments and prevent students from defaulting on their loans.

“With a little bit of planning there are some options that can help students minimize their debt loans,” Assistant Director of Admissions and Financial Aid Mark Johnson said. “Debt is a fairly common part of going to college, but it doesn’t have to be overwhelming.”

Students have six months after graduating before they are required to begin repayment on their direct loans such as Stafford loans. However, students enter into a fee-free grace period if they immediately continue from undergraduate to graduate school.

“They still may be borrowing in graduate school so some people may have significant debt loans,” Johnson said. “I think most students are savvy enough to realize that they are going to have to pay that back. But student loans are really tough to walk away from. The government has made it very difficult for students to claim bankruptcy and just walk away from their loans.”

Some ways to reduce debt include avoiding to borrow needlessly by not taking the maximum yearly amount unless there are no other options and applying for private scholarships. Working on campus through work-study programs or for faculty members is another way to defer cost. According to Johnson, the average student earns about $3,000 a year through work-study.

“Our students tend to do pretty well in terms of default,” Johnson said. Some issues that have arisen include not contacting their servicer (those responsible for collecting payments) and not leaving forwarding addresses so they are difficult to be tracked. New College’s Office of Financial Aid works with students and their servicers when students are graduating or indicate that they are withdrawing or transferring.

“It’s just real life, serious business that I’m sure some students don’t think about enough and I’m trying to inform students in a number of ways,” he said. “Students may or may not want to hear about it and it may not ring a bell, but we have to address the topic through different mediums.”

Students receive a checklist and a list of their loans in addition to going through a mandatory exit interview. “We don’t try to make it difficult,” Johnson continued. “It really is meant to encourage students and give them the information they need so that they can start building a good credit history.”

On Nov. 4, 2010 the Chronicle of Higher Education cited a College Board and Art and Science Group poll that said, “Nearly 40 percent said they had ‘no idea’ what their likely monthly payments on student loans would be after graduation.”

“An investment is worth taking some loans,” Johnson said. “Loans serve a good purpose and education is certainly a solid investment. But if you can minimize the loans and realize that every $1,000 you don’t borrow means a few dollars less every month for maybe ten years that you’re not repaying.”

Students can also save money by understanding the differences between the loans they can take out. Subsidized loans are interest free while the student is still in school and unsubsidized loans begin to accumulate interest immediately. Repayment is generally divided over 10 years but it can increase to 25 years if the amount borrowed is large enough. However the longer it takes to pay, the more it will cost in the end.

“Last week a Florida resident student who had great test scores and a solid GPA and he said he doesn’t have Bright Futures because he hasn’t done his 75 hours of community service. I thought, ‘How can you just ignore that?’ You’ve given away 4,500 bucks.”

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