Not all students are worried about the loan debt they’re racking up, and that’s what keeps Maureen Reilly up at night.
Reilly, the director of financial aid at SUNY Adirondack, said there’s never enough time or staff to do as much student financial counseling as she’d like, but she sees a real need for it, she said.
Students get to SUNY Adirondack, and colleges across the country, without any knowledge about borrowing. Some are first-generation college students, and many don’t have any concept of what student loans do, and how much debt they can accumulate and be unable to pay off for years or decades.
Reilly worries a student loan crisis akin to the 2008 housing market crash, could be in the future if nothing changes.
“They’re just being buried,” Reilly said. “My fear is that we’re going to see a similar crash. It’s going to blow up. There’s that much debt.”
Reilly has gotten angry phone calls from former students, demanding to know why she took their student loans away, only to find out they weren’t in school anymore and were thus ineligible for an educational loan. She has seen other students who want to take out student loans to fund their living expenses, and others who over-borrow.
Reilly and her staff try to get the message across to students that they should only borrow what they absolutely need, she said.
About half the SUNY Adirondack student population borrows to fund their education, according to the college’s most recent figures. That includes both federal and private student loans, though very few students at the community college take out private loans. For the 2011-12 school year, the average debt among students was $5,058, making the average amount of debt students leave with after two years about $10,000.
“That’s a lot for two years,” Reilly said of the college, at which the bill for full-time students is relatively low, compared with what students pay at its four-year counterparts.
About 42 percent of students at Skidmore College in Saratoga Springs borrowed to fund their education, said Beth Post-Lundquist, the college’s director of financial aid.
The cumulative indebtedness over four years was, on average, $19,000 for students who took out federal loans and $22,700 for all educational loans.
Federal loans are usually considered safer than private student loans because there’s a fixed interest rate and an interest cap, Post-Lundquist said.
“Indebtedness is a serious responsibility and with the economy the way that it is, I think worry about repaying loans is high,” Post-Lundquist said.
At SUNY Adirondack, Reilly is looking to a new SUNY program that partners community colleges with student loan servicing centers at the four-year state-operated campuses, to change things, or at least ensure students are better informed, she said.
It could mean colleges take profiles of their most at-risk students, and offer them additional or personalized counseling. It could be an initial counseling session for first-year students and then financial literacy services in future years, Reilly said.
SUNY Adirondack isn’t within the first wave of campuses in the program, but will be in the second, Reilly said.
Simplifying the student loan process is one option. Reilly has seen students with one Federal Direct Stafford Loan at one interest rate, and another with a different interest rate, she said.
Getting students to realize they shouldn’t “live like kings” during college because they’ll pay for it later, and getting them to share some of Reilly’s worry about their futures and debt, is one goal. If a student is looking at entering a field in which their starting salary will be around $30,000, he or she shouldn’t be leaving school with $50,000 in debt, Reilly said.
“We need to be aggressive,” Reilly said of getting students to realize the gravity of taking out large loans. “This is a debt, it’s not a debt that ever goes away, it’s not discharged in bankruptcy. We’re talking about communication. Don’t think it will go away; it just becomes bigger.”