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Director of Financial Aid Lynette Wahl said, to keep debt down, “Borrow only what you need.” Some students borrow money for “rainy day” purposes, which Wahl discourages. “Most people spend what they have, so if they borrow less they will spend less and therefore have to repay less.”

The type of loan can make a huge difference. Subsidized loans have interest that does not accumulate while the student is enrolled at least halfčtime. Many give students about six months after they graduate or are no longer enrolled at least halfčtime before interest starts accruing or payments have to be made.

Unsubsidized loans have interest that accrues while students are in college, and interest rates can be steep. The most common loan for Hamline students is the federal Stafford loan, which has both a subsidized and unsubsidized option. The federal Perkins loan is also subsidized, and has one of the lowest interest rates at a fixed five percent. U.S. Bank, Wells Fargo and TCF all list many loans for students on their websites, but very few have fixed interest rates. Most are listed as “variable” and the rates that are listed are as high as nine percent.

But Hamline students aren’t the only ones facing debt. The National Center for Education Statistics’ 2003-2004 survey of postsecondary student aid estimated that two-thirds of undergraduate students graduate with some sort of debt. That same study found that 49 percent of students in Minnesota took out loans and had borrowed an average of $11,800 during their undergraduate years. That average included students from public two- and four-year as well as private colleges and universities, which covers a wide variety of schools and could explain the drastic difference between Hamline students’ debt and the Minnesota average from just a few years ago.

“Students are never happy to borrow [and] we can understand that, so if we hear complaining about debt we are sympathetic to their concerns,” said Wahl. Students come in to the Financial Aid Office to ask for help with loans and sometimes, Wahl said, they get frustrated with the process.

There are not always enough guaranteed loan resources for all the students who need them. There are often complications with co-signers or credit as well, she added.

What does Wahl think graduates absolutely need to know about loans?

“Know the terms.”

There are time constraints for repayment, there are consolidation options that can be considered and students’ credit scores can affect the loan rate. Once students graduate, said Wahl, federal loans can be consolidated into one. This can change your interest rate.

“The new consolidated loan will have a fixed rate determined by a weighted average of the loans consolidated,” she said.
If students have any questions, the Office of Financial Aid is here to help and they have resources to help students get through this overwhelming process.