Photo by Daniel Goodman via Business Insider
Carlos Coba/Contributing Writer
According to the Tampa Bay Times, the amount of debt that students face because of federal and private loans is now in the trillions, exceeding both credit card and mortgage debt.
Such statistics are worrisome, especially when tuition continues to rise in most public schools, the choice of school usually preferred by students trying to avoid the unpleasant loan-signing process.
Consequently, the Tampa Bay Times reports that the University of South Florida has started programs that target the issue by financially guiding students through their undergraduate and graduate education.
This is intended to increase the students’ awareness regarding the severity of signing loans, especially private loans that tend to have higher interest rates than federal student loans, according to Finaid.org.
Nevertheless, during this time of financial duress, any loan is a burden to an undergraduate or graduate student that has to enter a fragile job market upon graduation.
One of the main issues could be that students sign the promissory notes of their loans without adequate financial advice. In some cases, even parents tend to sign off these loans without having consulted someone with knowledge or experience of the loan-repaying process, a process which their child will most likely have to face on his or her own once they graduate.
Regardless of how the loan is repaid, the amount of debt procured through the money borrowed and the interest that has accumulated upon that value will be a responsibility that could bring serious consequences. Defaulting on any kind of loan can lead to bankruptcy and, under specific circumstances, could even have serious legal repercussions.
Students should not be the most financially affected by the structural faults of our nations’ economy, which is where the root of the issue is: the structure of an economy that foments seeking alternate solutions to financial shortcomings by belittling the seriousness of signing loans.
In my specific case, I signed some private loans because they were the only ones that provided me with enough money to pay the tuition of the private university I previously attended. Regardless, I wish I had some guidance during the process of signing those loans.
However, the issue does not only affect students of private universities, which is what USF has started to show, given that the budget of public universities rely on governmental appropriations. This means that the budgets of public universities diminish when the government’s budget is decreased, resulting in the increase of tuition.
As a public university, FIU should follow the steps USF has taken by starting programs that serve as financial advising, specifically for the loan-signing and loan-repaying process.
The government should show more concern regarding the student debt issue by mandating public universities to have specific advisors for loan-related consultations. FIU’s Financial Aid department should provide the services of loan advising to students struggling to pay their tuition.
Financial aid advisors should be able to meet with FIU students and their parents to discuss if loans are required, alternate solutions to financial shortcomings, such as scholarships or grants, the interest rates of loans, loan repayment and even the chance of defaulting on a loan.
Everyone should have the right to pay their education through whatever method they want, but for the sake of students’ futures and finances, universities should be more willing to help their student body finance their education through more practical and less-risky methods. FIU should embrace this concept started by USF; maybe that would set a trend which would benefit the students of public universities.
1. “USF program helps students manage money, debt,” via Tampa Bay Times
2. “Private Education Loans,” via Finaid.org