If you are a student at LSU, you are most likely receiving financial aid. The University provides financial aid to 93% of students, according to Prep Scholar. This figure is 7% higher than the national average. Many LSU students do not take out loans as the University aims to cover student tuition fees based on their parents’ financial information.
However, this was not the case for Maria Castellanos, a biology student at LSU.
Castellanos came to the United States from Colombia at the age of 15 and did not have access to his parents’ financial information. Because she could not receive the necessary financial assistance from LSU, Castellanos took out student loans and began working more to pay for her living expenses.
Castellanos said her father had helped her with some of her financial burden during her first two years at LSU and that she also had savings that she used to pay for tuition and living expenses. When that money ran out, she was forced to take out loans and start working more during the week.
“After my dad couldn’t help me anymore things got a bit more expensive and living here in Baton Rouge I had to pay rent and everything,” Castellanos said. “I had to start taking out loans to help me with the financial burden during the semester so that I could concentrate in school.”
There are currently 45 million Americans who collectively owe nearly $ 1.6 trillion in student loan debt, which is now the second highest category of consumer debt in the United States behind mortgage debt alone. .
In Louisiana, 48% of students take out student loans, and the average graduate will leave school with $ 25,512 in debt. LSU’s numbers were lower than the state average, with 44% of LSU students leaving college with student loan debt and the average graduate leaving with $ 24,851, according to the Institute for College Access and Success. .
Castellanos was supposed to graduate in 2019, but her financial situation forced her to become a part-time student in the spring of her freshman year so that she could work enough during the week to pay her living expenses and start the monthly payments. of its student loans.
“I only work part-time because I have to work at least 20 to 35 hours a week. This way I can pay my expenses, and I can also pay off some of my loans, ”Castellanos said. “I had to delay graduation for maybe two more semesters because I want to be able to finish, but at the same time I want to be able to pay some of this stuff up front instead of having to. earn interest on student loans.
Most private student lenders do not require students to make student loan payments while in school. Some students are eligible for direct subsidized loans, which require no interest until graduation.
Unsubsidized loans bear interest from the day the student loan is disbursed, meaning that students will graduate with a greater loan balance than they took out.
Castellenos said she tries to pay as much as she can before she graduates.
“Sometimes (the monthly payment) doesn’t come, and I can’t pay up front, so it’s stressful because anything you can’t pay in school is going to raise the interest rate to the exit, “says Castellanos.
In the spring of 2020, Castellanos was planning to go back to being a full-time student, but the COVID-19 pandemic has made it difficult to take online courses and work.
“A load that could have been done in a semester and a half, I had to spread over three semesters because of COVID. I know myself and I know that the online structure, especially for biology, is extremely difficult, ”said Castellanos. “I knew I wasn’t going to be able to keep up with this and keep working and I wasn’t going to be able to keep up on my own. It’s a lot to think about. I’ve had stress and mental health issues before, and I don’t want to go back to that.
Castellanos was unable to attend summer school because she was making less money during her quarantine and had to work all summer. Castellanos said she is still trying to offset the financial pressure caused by the pandemic.
“During the summer I was just working, I didn’t even take a break,” Castellenos said. “I think I had two days of vacation. I must have saved enough money not to worry too much about the fall semester.
President Trump’s executive order and the CARES law enacted in the wake of the coronavirus pandemic have relieved borrowers by suspending federal student loan payments, halting the accumulation of interest on federal student loans, and halting loan collections federal students in default.
However, these changes are temporary and are expected to end on December 31.
Castellanos has said she wants to go to college, but the thought of having to take out even more college loans is scary.
“I’m so scared to take more loans,” Castellanos said. “It’s a lot of stress balancing your monthly payment with your living expenses. It is very overwhelming. It is something that hangs at the back of your mind. You have to constantly think about it. “
Despite the stress caused by her student loan debt, Castellanos said the financial sacrifice was worth her to study.
“The way I see it, these days you have to pay a price for everything you get,” Castellanos said. “I knew I wanted to go to college. I knew my experience of going to college would be a gamble because not only was I financially alone, but no one in my family knew how to teach me what to do.
Castellanos said it’s hard for people to be successful without getting into debt unless they start out rich.
Those with a bachelor’s degree will earn about $ 32,000 more per year than those with only a high school diploma, and the income gap between college
graduates and those with less education continues to widen, according to the Lumina Foundation and the Pew Research Center.
Still, signs have emerged that the university’s economic benefits may wane, according to the Federal Reserve Bank of St. Louis.
“Despite the significant income and wealth advantages enjoyed on average by families with heads with a bachelor’s degree or above compared to families with heads without a post-secondary degree, recent cohorts university graduates seem to be doing worse than previous generations, ”the Federal Reserve. Bank paper read.
The researchers pointed to the rising cost of higher education as one explanation for this trend. The increasing cost of attendance
college debt and hence student loans – without reducing the income of university graduates – would reduce their wealth, at least early in life.
LSU finance professor Lewis Kilbourne said that while he wouldn’t describe the current student debt situation as a crisis, it is a problem he could see getting worse.
The default rate on student loans declined slightly to around 10% in 2019.
“It’s not a small number, but I don’t think it’s a crisis – I think it can become a crisis,” Kilbourne said.
Kilbourne said most student loan repayment programs allow graduates to repay their loans on a timely basis, and there are plenty of alternatives before a student defaults.
He also said that the “excess” of student loans over graduates could be damaging to the economy.
“It’s a problem and it doesn’t help the economy to have these loans in default for students who would like to [otherwise]become consumers or customers for someone, ”Kilbourne said. “It is in the best interests of the government and the economy to give some tolerance to these loans.”
“It’s a surplus of educated potential clients who can join the economy as a taxpayer with the possibility of higher income and improving through their education. “