People overestimate student debt, but that may not affect UI students.
By Kayli Reese
Many students would be glad to know that they won’t graduate with as much debt as they think, but this may mean they are borrowing more.
At the 2016 Iowa State Fair, the Iowa College Aid — which administers grants and scholarships for Iowa students and helps families prepare and plan for college bills — conducted a nonscientific survey about student-loan debt. People who came up to the Iowa College Aid booth could take the survey on an iPad.
“We asked, ‘How much debt does the average student have in Iowa?’ ” said Elizabeth Sedrel, communications coordinator for Iowa College Aid. “We wanted to know how realistic of a perception people had [about student debt].”
The survey results show that people actually overestimate loan debt after college is completed. For public universities specifically, those who took the survey missed the debt average by nearly 23 percent — 58 percent of people believed students leave four-year universities with around $35,000 in debt.
The actual average is closer to $27,000, Sedrel said. “People should be happy [that their] debt is less than they believe,” she said.
The average amount of debt after four years at the University of Iowa is very close to the average reported by Iowa College Aid.
For 2014-15, the average debt was $27,415, said Sara Even, associate director of UI Financial Aid.
This sum is only the amount for those who do have debt; Even said 44 percent of undergraduates leave the UI with no debt. Those students who do have debt, she said, are overall able to repay their loans, and the default rate at the UI is very low.
“We work with student very closely with how much they need to borrow,” she said.
The biggest issue with overestimating debt amount, Even said, is students may be basing their college decisions on the amount of debt they assume they will have. Students may choose a different path than attending the UI if they believe their debt will be extreme, she said.
UI freshman Madison Osborn knows the dangers of debt in her college career.
“I worked full-time the entire summer before college so I could pay for college out of pocket,” she said.
So far, Osborn is waiting to borrow any money because she is not viable for loans that will not have high interest rates.
Currently, the Financial Aid Office has plenty of options for students worried about loans and debt, Even said. Emails are sent to student borrowers from the office, she said, outlining the amount students owe to the UI and the anticipated monthly payment in the future. Even also noted there are financial-literacy specialists who can work with students one-on-one on planning for upcoming debt.
Of course, no student wants to graduate with debt. Osborn said she hopes to never have to take out a loan and is planning on working two jobs the summer after her freshman year.
“It’s easier to pay straight up than to pay interest,” she said.