The majority of today’s college students (65%) graduate with some type of student debt.
In fact, student loan debt is the fastest-growing debt in the US, making up 11% of the country’s total debt.
Incurring debt and taking on loans to pursue education is an experience you may know firsthand. Between credit cards and/or loans to pay for the cost of living to attend school, most of us have or will know what it is like to carry some amount of debt — often substantial. Let me be clear though: debt is not all bad! It can open doors to amazing opportunities.
In supporting your students, however, it’s critical to help them remain conscious of their finances by creating a proactive plan to pay off debts. With that in mind, here are my tips to help them — and perhaps yourself — get ahead of debt.
1. Know the amount
It is tempting to ignore debt amounts while going through the educational experiences you’ve paid for, but it’s important to know what is accumulating. Remind students to check in on their accounts each semester.
To stay ahead of debt, students should also know the legal terms and conditions of their debt sources in order to develop a plan to pay it off. Encourage students to review the terms closely and to call their financial providers to clarify anything they don’t understand.
The terms from one provider to another may vary greatly. Debt is not always one lump sum through one financial entity. When discussing debt, remind students to be aware of money owed as a whole from sources like credit cards, student loans, overdue bills, medical bills, personal loans, and utility bills.
2. Advise them to budget
Knowing your debt amount is crucial to developing a budget that lets you enjoy life while taking care of what you owe. As an SApro, you’re in a great position to bring this knowledge to students. Here are some ways to do so.
- Host a budgeting seminar or program series. Depending on your own budgeting knowledge, you might be able to host this program yourself. Alternatively, you can invite a local or campus financial advisor to host it. My Money Coach, a free public service from the Credit Counseling Society, offers a calendar of free webinars you could watch to develop ideas for your own session or as a web resource to share directly with students.
- Have budgets available to share. Some students may not feel comfortable disclosing their own budgets to you but you can still offer to send them resources. Check out Best Budget Spreadsheets for a great starting point.
3. Host financial programming
Budgeting is just one aspect of finances. There’s a lot of additional ground you can cover with programs like these:
- A screening of the Money Explained episode “Student Loans”: This episode dives into the history and evolution of educational loans. A screening of a documentary like this is a great way to help students digest financial information on their own without having to talk to others about it if they’re not ready. Optionally, you can host a discussion or conduct anonymous polls for students to express their thoughts after watching the documentary.
- Tackling savings, car or home buying, or consumer awareness topics: This Free Financial Literacy Resources for College Students has step-by-step lessons, presentations, and guides to help readers navigate these financial topics. They may inspire you to design programs around the topics that are most relevant to your students. Additionally, many local businesses, like tax preparers and banks, offer free resources or have their own workshops specific to college students. Consider tapping into what’s available locally to co-host financial programs.
- Graduate-specific programs: The goal of these programs should be to get students thinking about debt before they graduate. Since the terms involved with paying back debt can be overwhelming and nuanced, it’s better to know ahead of time what’s coming in order to prepare.
Invite the financial aid office to host or collaborate with you on these sessions. These colleagues should be able to help plan a program to assist students in understanding key terms, developing payment plans, meeting the payment minimums, and more.
4. Learn about income-driven repayment options
For students who will be repaying government loans, income-driven repayment is an affordable payback option that adjusts based on, well, their income. This option is often something the loanee needs to initiate or request; otherwise, their minimum can remain higher than what they can afford. The U.S. Department of Education details that payment option here.
5. Remind students to apply for scholarships every year
Once a student has taken out a loan, they may forget that there are scholarships available to continuously apply for. Don’t let them forget! Remind them of scholarships, including ones that are local and specific to your institution, and help them prepare to apply. If you’re unsure of what your institution offers, check in with the financial aid office. In addition, remind students they may be able to find some through local or national non-profit organizations. They can also discover some through sites like Scholarship Finder or College Scholarship Search.
6. Normalize cost-saving decisions that might not align with traditional college experiences
The best way to pay off debt is to avoid incurring more. While it may be exciting and fun to pursue an on-campus college experience, living in the residence halls and eating on a meal plan, it’s not always financially feasible for every student. As SApros we can help normalize day-to-day cost-saving decisions like:
- Living off-campus or at home: Living in a residence hall can be incredibly expensive at most institutions, which is why it’s important to advocate for exemption policies to on-campus requirements. And if those policies are already in place, help students become more aware of such exemptions.
- Commuting can be a cost-effective alternative. Encourage students to connect with academic advisors to design a course schedule that fits their commute time.
- Cooking meals: Not everyone knows how to cook, which is why many students eat out or opt for a campus meal plan! Help students develop this life skill by sharing easy beginner recipes or hosting a cooking class or meal planning program. Although the convenience of meal plans make them appealing, you can demonstrate how being strategic with buying groceries and making your own meals can be more cost-effective.
- Applying for government food programs: A lack of cooking skills may be the top barrier for some students, but others will struggle more with the food’s cost. Between 34-39% of students experience food insecurity. A student’s low income level may qualify them for assistance programs like SNAP, the Supplemental Nutritional Assistance Program. You can make students aware of this resource by detailing it in a one-page flier handed out at food or financial programs.
Although many of these ideas may seem simple or even obvious to you, for students, tactics for staying ahead of debt can be a completely new concept they haven’t begun to think about. While there can be a lot of value in the different educational experiences our students are pursuing, we can help them be mindful of not letting the cost of the experience overwhelm the future they’re pursuing.