It’s that time of year again. Students nationwide are heading back to college and signing fresh promissory notes for financial aid. I am one of them. Many of us will mourn the loss of the summer sun while we simultaneously anticipate carving pumpkins and the smell of fallen leaves.
As our quest for knowledge continues and in that vein, I dare to ask, how much student debt do you have and, more importantly, do you understand the parameters in which you agreed to such debt?
As a graduate student, I am skilled in the art of back to school preparation – including ensuring that my financial aid paperwork is signed and ready for disbursement. However, until recently, I didn’t actually know what I had gotten myself into, and what legislation is in place to protect – or harm me. Knowledge is power; the lack of it can be costly.
Doing a little math, I was shocked to learn that the sum I will owe at the conclusion of my graduate studies, roughly $33,000, will accrue additional interest of about $12,000 over the course of the loan. That means for the next decade I will be responsible for a monthly payment of approximately $375, in addition to covering all my other costs of living. That’s about equal to a month of groceries, a monthly car payment, or a health insurance premium. I am certainly not the worst off – and I am not alone.
Even more troubling is the additional cost to me as a woman. The gender pay gap complicates the equity women strive for in choosing to purchase an education. I might be stuck paying off my student loan debt longer than the men sitting next to me in class, due to the lower pay women receive for the same work as men. Women typically earn 79 cents for every dollar a man is paid.
Paying my loan back over a longer period means compounding interest, and a higher total cost.
One recent notable action by President Barack Obama includes changes to rules regarding financial aid applications. These new rules allow students to apply earlier in an aim to increase Pell grant eligibility, which may decrease the total amount needed for loan borrowers. It’s a small step, but in the right direction.
If I could reach back in time to my former self I would tell her to know the key terms when reading your promissory notes, map out a plan that is best for you, and talk to your congressional representatives about legislation that will work toward solving the student debt crisis. We can make this a better world for students and higher education.
This is my story, share yours at DeclareYourDebt
The Alliance for a Just Society has written a series of reports on the effects of student loan debt which include personal narratives of students who raced to the challenge of higher education and will continue to pay the price tag for years to come.