According to U.S. News, the average college student graduates with around $30,000 in student loans.
Students who have entered into an unsubsidized loan may not be aware that they can start making payments on the 4.7 percent interest portion of the loan as soon as the money has been disbursed to their school. Therefore, if a full time NECC student was to finance their entire associate degree through unsubsidized loans, at around $1,800 per semester for two years they would end up paying approximately $10,000 in full term loan payments.
However, many students eagerly accept the full amount offered so that they “get money back,” not looking ahead to realize that by the end of their debt repayment, that extra money that they used to buy Christmas gifts or new clothes has just brought their academic debt up to around $13,000.
“I worry about students getting into long-term loans,” said NECC Professor James Sullivan. “You do want to establish credit, but once you start opening credit cards, it seems like magic money. But you don’t want to spend what you don’t have.”
On Oct. 13, just six days after many students received financial aid refunds, NECC held its third annual bank fair on the Haverhill campus. Although they were giving out free pens and plenty of literature on various types of accounts, many of the banks who participated in the fair do not offer student loans. With high tuition and the general cost of living, it may seem ironic for a college student with little to no disposable income to be putting money in the bank for later.
However, establishing a checking account (no matter how low the balance) could help students develop stronger budgeting skills.
“It’s hard to do but you have to live within your means,” said Sullivan.
“You’ve got to stay on top of any and all loans right from day one,” said NECC graduate Lisa Morelli, now CEO of Andover Federal Credit Union. “I can’t tell you how many times my members accidentally miss their student loan payment because they don’t read letters from their lender… because they’ve been getting the same statement since they graduated ten years ago. But the truth is, their account was transferred to another lender who did not have their account set up properly.”
