Get a degree, not student debt

Top ten tips – how to avoid racking up a ton of college debt

By Shannon Milliken
The Collegian

Fresno State credential student Renee Gonzalez stood in the long line outside the financial aid office.

She shifted her weight, her face showing blatant unhappiness regarding her reason for being there.

“I’m about $20,000 in debt from student loans,” Gonzalez said. “I don’t even have credit cards.”

During the years when she was an undergraduate student, Gonzalez did not qualify for grants because her income was too high, though not high enough to pay for school, so she took the loans financial aid offered her.

Gonzalez said she did have some hope now because she is now a graduate student in the credential program, which makes her eligible for grants.

Director of Financial Aid Maria Hernandez and Finance professor Elizabeth Shields have come up with ten tips to ensure debt doesn’t happen to you.

1. “It’s six simple words: Don’t spend more than you earn,” Shields said. “Or we can make it even simpler: Spend less than you earn, that’s only five words.”

2. Keep no more than four credit cards. One is necessary to build credit history, but only as long as it is used to pay a fixed expense and pay it off every month, Shields said. If you have more than four, it will hurt your credit score. According to Shields, this can diminish your chances of getting a loan.

3. Don’t carry your credit card with you at all times. Use it to pay that one fixed expense, or in case of emergency. If you don’t have it with you, you won’t be tempted to put a purchase on credit card that you can’t afford, Shields said.

4. Don’t get a pay-day loan check. “Whereas a student credit card can run a 20 percent APR, a pay-day advance in California can have up to 457 percent APR,” Shields said. This means you would be paying back several times the amount you were originally lent.

5. Make sure to read every credit card and bank statement carefully. Mistakes can happen, and often they’re not in your favor.

6. Be conscious of the costs of entertainment and eating out. Hernandez said while students are in college they usually prefer going out with their friends to cooking at home, but in the long run eating at home can save them a lot of money. As to entertainment, “students need to think of what do I need right now while I’m in school,” Hernandez said.

7. Accept the grants offered by financial aid, but not necessarily the loans. Aid is need-based, so the school offers students what they estimate them to need. Grants are free, so students usually always take those, but you don’t need to feel obligated to accept the whole loan offer, Hernandez said. The loan is just an offer, and you can choose to accept part of the loan.

Students who do choose to borrow a loan go through entrance and exit processes to help them understand the payback responsibilities they are taking on. “I know taking a loan is nobody’s first option, so if you don’t have to borrow then don’t,” Hernandez said. “If you do, consider it an investment in your future, because after college you will be more marketable than someone without a college education.”

8. Don’t depend on having a sufficient income right after graduation. You may get a good job right out of college, but lot of expenses come up at that time. You may be moving or needing a new car and you’ll have to start repaying your student loans. Lenders will usually work with you to make your payment plan fit your needs, as long as you explain your situation to them, Hernandez said. Once you’ve set up a payment plan, stick to it or it can ruin your credit.

9. Always advise financial aid and your lenders of changes of address. If they send you payment notices that you never receive because you’ve moved, it will also hurt your credit.

10. Don’t be afraid to receive financial aid. It is much less expensive to take a student loan to pay tuition than to put it on your credit card.

Student loans don’t start accruing interest until six months after graduation. Financial aid is offered to around 72 percent of Fresno State students, and about 65 percent of students choose to receive aid, said Hernandez.

Hernandez, who has been in the Fresno State Financial Aid office for 27 years, said to follow the above tips to help stay out of debt, because “it is real easy to get in debt, but not nearly as easy to come out afterwards.”

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