Olubunkola Adejobi will be paying off her college education until she’s 38, but at age 25, she considers that a blessing.
After leaving Florida A & M University in the fall, she plans to pay only $150 a month on about $20,000 in loans.
“I know a lot of people, especially from out-of-state, who are in much greater debt,” said Adejobi, a 2008 graduate from Miramar, Fla. “I don’t feel bad about the loans I just wished I looked into scholarships sooner.”
According to a study by the U.S. Department of Education, student loan debt is the second highest form of debt facing Americans today, just after credit card debt.
The study suggests rising tuition rates, higher borrowing limits on government loans and a boom of low-income students, have pushed the average debt burden of college graduates higher. Especially, as more students from all income groups borrow more to finance their undergraduate educations.
“I know I will have a job that will help me pay back the loans a lot quicker…it’s just a matter of finding that job,” Adejobi said. Adejobi, like many other undergraduate students, is staying in school to prolong the start date for her to begin paying back the loans.
College debt has a profound effect on the career, financial security, and lifestyle choices for years after college, according to The College Debt Crunch, a survey of college graduates released by AllianceBernstein Investments, Inc.
“Large amounts of college debt put(s) graduates in a hole that can take years, even decades from which to emerge,” said Richard A. Davies, Senior Managing Director at AllianceBernstein Investments. “Funding a college education isn’t just about those four years…it’s about a young adult’s ability to start a family, buy a house and, ultimately, even to one day retire.”
Davies added, “when you saddle young adults with debt, they’re not just borrowing their college tuition; they’re borrowing from their future.”
According to the survey among those graduating seniors with debt, 34 percent said they have sold possessions to make ends meet and 42-percent say they live paycheck to paycheck.
Shawnta Friday-Stroud, dean of the School of Business and Industry, advised graduates on how to live below their means.
“Do not buy short-term items on credit…if you don’t have it don’t get it,” Friday-Stroud said. “If you buy clothes on credit and don’t plan on paying the balance off immediately you may end up paying back three to four times the original price.”
The dean also explained the importance of having a financial plan for the future including paying back college debt.
“Don’t default on any federal student loan,” Friday-Stroud said. “Sometimes you’re going to have to take the job you don’t want to pay off debt.”
William Wiggins a spring 2008 graduate of FAMU said he doesn’t agree with taking huge loans, but understands why some students must.
“Loans are a necessary evil…they help and hurt at the same time,” said Wiggins, a tax associate at Pricewaterhouse Coopers.
Wiggins recommends students pay the minimum when the bills start to roll in.
“In the end companies are just looking to make their money back, its better to pay low monthly payments than nothing at all.” Wiggins said.