Oscar Lira came from a low-income background, and as a first-generation college student, he was determined to carve out a successful financial future for himself and his family.
The finance alumnus was excited to start at UTA in Fall 2013, but the question of how he would pay for school soon came up. Undaunted, he took out six subsidized and unsubsidized loans with the mind-set that he would secure a well paying job after graduation and pay them off. In total, he borrowed $15,000 (now $18,000 because of accrued interest) to put himself through the first year and a half of school.
If he had borrowed that amount consistently throughout his college career, he would currently be buried in about $70,000 of debt.
Although student loan debt like Lira’s is now common, this was not always the case.
The first student loans were disbursed exclusively to students at Harvard University in 1840, and the amount rose steadily by the late 1980s. In 1986, federal education loan debt in the U.S. totaled $10 billion, which deterred many people from starting families and purchasing homes and cars.
This year, student loan debt is at an estimated total of $1.6 trillion. In 2016, the average amount per UTA graduate was $14,743. The 2019 national average is $35,359.
The debt crisis is in part due to increased tuition costs, decreased state spending on higher education and private loan sharks, according to the Center for Online Education. It is also due to a lack of awareness when it comes to the necessary amount of money to borrow and the nature of the specific loan taken.
Kay Byington, Student Money Management Center assistant director, said the key is to always be in control of one’s finances.
To begin with, students should only accept the amount of loans they need. It is not required to accept the entire amount one is eligible for. Byington said it is important to keep track of the loan balance to prevent being blindsided upon graduation. Students can also check their balances at the Student Accounts Office in Davis Hall.
“What I’ve learned in the past just by looking at how people are with their money [is that] it doesn’t really matter how much you make if you don’t have control of it,” she said.
Although many people don’t start paying off student loans until after graduation, Byington said little habits like packing one’s lunch a few times a week instead of buying it and maintaining a budget are good habits to instill.
The Student Money Management Center is one resource available to students looking to improve their financial habits. Upperclassmen and alumni serve as peer mentors who help students calculate their income and expenses and draw up a budget. The center encourages students to follow up on the initial consultation if they realize the devised budget no longer matches their financial situation or they encounter other issues.
They advise seniors to come in before graduation to go over loan balances, lenders and available payment options.
“A lot of times it’s not a matter of not being willing to pay your bills or pay your loans, it’s that you’re kind of overwhelmed,” Byington said.
Lira was able to offset what would have been a financial calamity by transferring to community college in his sophomore year to finish his prerequisite courses and returning to UTA as a junior. He found a part-time job that allowed him to pay his tuition out of pocket upon his return and for the remainder of his time at UTA.
Now, he makes consistent loan payments and intends to finish paying them off in the next few years.
Some students don’t have the luxury of not taking out loans, said Cynthia Manzano, Counseling and Psychological Services counselor and outreach coordinator. They may not have family or friends who can support them financially.
“I think it’s important for students to not get so caught up in whether or not to have loans but being aware of what might be a reasonable amount for them to take on every semester,” she said.
However, this awareness may not stop the situation from affecting students’ mental health.
Manzano said current and future financial burdens are a common cause of stress, anxiety and depression for students.
Direct solutions include setting up monthly payments and negotiating with one’s lender, but students can also tackle mental strain by engaging in healthy practices like meditation and exercise.
Manzano also encourages students to take advantage of campus resources like the Lockheed Martin Career Development Center, emergency assistance fund, Tri-C food pantry, Student Money Management Center and, of course, Counseling and Psychological Services.
As a first-generation college student, Lira said he did not receive proper guidance before college. His advice for students considering loans is to ensure they are fully informed and to not dismiss the seriousness of taking them out just because they can postpone the payments.
He said UTA should emphasize alternatives to loans — like scholarships and grants — during orientation. The administration recently pledged to invest $25 million in scholarships over five years, beginning Fall 2021. These scholarships will be available to first-generation, low-income and high achieving students.
Lira was motivated to pursue his degree despite potential debt because of the culture of hard work he learned from his parents, and he said he is grateful for the sacrifices they made to support his decision. He was also encouraged by the community he found at UTA.
“I wouldn’t trade where I’m at right now for anything else, even if I had a really good job [and] a lot of money but not the education I have,” he said. “I don’t think I would be as happy as I am now.”