There are a lot of fun things about graduating college: graduation photos, senior bar golf and no more exams. One aspect of graduation that isn’t fun is student loans.
To answer the questions you’re too afraid to ask, staff writer Krupa Kaneria talked with Eric Johnson, the assistant director for policy analysis and communications in The Office of Scholarships and Student Aid, about his work, UNC’s approach to student loans and the smartest ways to pay off your debts.
The Daily Tar Heel: What advice about paying off loans would you give to the students who are about to graduate?
Eric Johnson: The first piece of advice that I would give is that your first job is almost never going to be your last job. So keep in mind that the first career move is not forever and that most people who come out of school tend to feel stressed because of loans in their first or second job. What you have done by getting a college degree is give yourself a lifetime of upward mobility.
On a practical level, you want to make sure that you understand the repayment terms. If you have borrowed federal loans, those come with a lot of protections. There are income-based repayment plans where you only have to pay a certain portion of your disposable income. If you’re still in school, those loans get deferred. If your income is below a certain threshold, depending on what kind of loans they are, they can be deferred.
Make sure you understand what kinds of protections come with those loans. That also means getting on the phone with the Department of Education or your loan servicer and bugging them until they get your questions answered.
DTH: How can people be smart about their financial aid and minimize loan payments?
EJ: First of all, it is important to understand that only about two out of five students at UNC-Chapel Hill carry loans at graduation — so less than half of the students graduating will have student loans as a part of their Carolina education, which is something we are pretty proud of and work hard at. For those who do borrow, the average amount of debt among those students is about $10,000 below the national average.
Borrowing to invest in higher education is a reasonable thing to do, and students should feel comfortable taking on a reasonable amount of debt in order to get a valuable college degree.
There is a lot that you can do to minimize the amount of borrowing, the most important being to budget carefully. We always say that you should live like a student while you’re in college so you don’t have to live like a college student after college.
Make sure you only get the meal plan that you need, or after you move off-campus, learn how to cook at home. Don’t eat out too much. Don’t take vacations that you have to borrow money to take. And we generally encourage students who have the chance to do work-study to take advantage of that. It lets you work about 10 or 12 hours a week at a campus job or a job in the community.
But, I think one of the things that’s really important that we advise students to do is don’t try and completely avoid taking on any debt by working 15 or 20 hours a week. It is much more important that you focus on school and get done on time so that you can start earning and paying back those loans rather than trying to balance an excessive amount of work with school. That is when you start to run the risk of staying more than four years or not graduating at all.
If you look nationally, the students who have the most trouble with student debt are not those who borrowed and graduated. It is students who borrowed a little bit and then dropped out of school. That is where you see students really struggle to repay their loans. The default rates are much, much higher for students with small amounts of loans because they are the folks who borrowed and then didn’t graduate. So, the most important thing that you can do to make college affordable is to finish it.
DTH: How does UNC approach student financial aid?
EJ: Our overarching goal is to make sure no student is ever barred from coming to Carolina for lack of financial resources. So we want to make sure that anybody who earns admission can afford to come, and that is kind of the broad mission of the Office of Scholarships and Student Aid.
UNC puts a huge emphasis on that because we think that it is the right thing for a public institution to do, and also because that is how you get the best students. We are able to admit students entirely on the basis of their academic merit, extracurriculars, all of the stuff the admissions office cares about, and we want to make sure that they can afford to come.
DTH: What are the best ways to find scholarships and funds to pay for college?
EJ:We refer students to sites like Fastweb or CFNC. We really encourage people to ask around in their hometowns and communities because a lot of times there are smaller private scholarships that can really add up over time.
There are a lot of funding opportunities on campus for specific things that you might want to do, like study abroad or undergraduate research. We strongly encourage students to ask around in their departments, their professors, any organizations that they are involved in to see if there are ways to offset some of those costs.
To get the day's news and headlines in your inbox each morning, sign up for our email newsletters.