It's an end of the month tradition: bills.
The credit card statement, the bar tab, the cellphone and bursar bills are all reminders that everything comes with a price.
The cost of higher education means students are often unable to clear these bills and are racking up increasing amounts of debt.
The National Postsecondary Aid Study, which was released last year, found over two-thirds of undergraduates and graduate students have post-graduation education debts. Some have as much as $125,000 to repay.
"The typical undergraduate student loan borrower at Tufts graduates with about $18,000-$20,000 of student loan debt, which works out to monthly payments of $200 to $250 per month, depending on the current interest rate," Tufts Director of Financial Aid Patricia Reilly said.
Goldman Sachs Product Management Specialist Kevin Ng (LA '99) found the amount of time it takes the average student to become debt-free "will vary depending on graduate school, occupation, and location. It also depends on how much you had to borrow - I have many peers who still have loans and haven't even done graduate school yet," Ng said. "So it could take about 15 years to be truly debt-free. For medical students, [it will probably take] longer, for law or business school students, probably shorter."
"My only advice - learn how to cook!" Ng said.
For senior Thuy Le the cost of postsecondary education was not a major factor in the college search. "My parents always told me never to make money an issue because they wanted me to get a quality education," she said. "They said they'd always find a way to work things out."
Le said she admits she hasn't given much thought to her financial responsibilities after graduation. "I think the question that comes first is career plans or graduate school, not how [students] are going to pay off their loans," she said.
For students lacking direction on the often confusing road to financial freedom, Reilly recommends consolidating student loans and paying them off over a longer period of time. Students can use deferment and forbearance options, which paired with careful budgeting, can eventually eliminate debt.
Consolidating became comparatively more expensive on July 1, when interest rates on student loans increased by the biggest margin in 15 years.
Some students tried to avoid the rate hike by consolidating in June. The rush of students across the country resulted in lenders being swamped with more applications than they could process.
According to the Associated Press, student loan provider Sallie Mae saw 360,000 consolidation applications in the second quarter, more than the total amount of requests the previous year. As of the beginning of August, the company was still processing $6 billion in consolidation loans.
The Department of Education decided lower interested rates would be locked in only for completed consolidation applications. Students are now finding themselves facing the new, higher rates until their paperwork is processed.
Even with the interest rate increases, student loans are still near historical lows. And there is still reason for optimism: Tufts students have historically been able to get out of the red.
"The federal government tracks the default rate at each institution [the percentage of students who do not repay their student loans]," Reilly said. "The average default rate nationwide is approximately five percent. The default rate at Tufts is less than one percent, which is one of the lowest default rates in the country."
Tufts' Financial Aid Web site offers resources for students to better understand their current and future financial situations. Loan calculators, tips for managing credit, links to information regarding credit reports and federal aid and explanations of different repayment plans are on the site.
Advice on when and how specific loans should be repaid varies. The Federal Student Aid recommends keeping all loan documents, recording all interactions with lenders, including the loan account number on all correspondence with lenders, notify your school and loan holder in writing if you move or change your name or Social Security number, and never hesitating to speak up when you don't understand something.
Le said she has not yet sought out assistance from the financial aid office or received debt counseling.
"If there is help," Le said, "I don't know about it. I do have the advantage of being the youngest sibling though, so my family has been through this twice already."
Being the youngest in her family was originally beneficial for Le. "Since I had two sisters already in college, I was banking on getting a good financial aid package, which I did from Tufts," she said. But "now that they have both graduated, Tufts has given me significantly less, causing my family to take out more loans."
Despite the heavier debt burden, Le has yet to devise a definitive plan for managing her debt. "I will soon, though," she said. "I should have a plan, since I'm an economics major!"
Further information about debt management can be found at http://www.nelliemae.com/schools/tufts/tufts.html
