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Financial aid tips for families & grads with student debt

Brochures inside the UW-Green Bay financial aid office. (WLUK)

FOX 11 continues to take a closer look at the high cost of higher education and preparing for it ahead of time.

Our coverage includes a town hall meeting on student loan debt Thursday evening.

Financial aid advisers at area universities say families looking at colleges don't think about money early enough in the selection process.

Roughly 70 percent of college graduates finish school with debt, according to The Institute for College Access and Success.

"The college debt, it's just that dark cloud hanging over you," said UW-Green Bay graduate Nicole Kattner.

Financial planners say managing the loans takes diligence from start to finish.

"Most people are going to take on debt, but let's make it calculated debt," said Dean Listle of Secure Retirement Solutions in Ashwaubenon.

One year of tuition and fees at a four-year public university in Wisconsin averages around $8,800. That doesn't include books or room and board which can cost close to $10,000 a year for students living on campus, according to The College Board.

Listle admits most families can't manage saving enough to directly pay for college.

"If you do the math, you take a child who was just born and if you were to fund $250 a month, by the time that child hits 18 you should be about right for a four-year state college," he said.

There are options to save some money for college that generate more interest than a savings or money market account.

"We still recommend firmly a 529 plan," said Listle. "At least you can get some tax-deferred growth and then when you do take the money out to use for a qualified education, on a federal level it's tax free."

Financial aid experts at UWGB and St. Norbert College say families need to have open conversations early on about money - comparing net prices and considering loan options.

"A lot of families aren't ready to talk about it when they're shopping for colleges," said Sue Steeno, the assistant financial aid director at UWGB. "They're ready for it when their child is ready to go to school. Well it's almost too late at that point. We try to start that conversation much earlier."

"They need to understand the terms and conditions of loans that they are considering," said Jessica Rafeld, the financial aid director at St. Norbert College. "'What is the interest rate? Is it fixed or variable? What's the repayment going to look like? When does repayment begin?' So they need to understand those concepts. And then it's very important, too, as they're exploring those options, they can rate shop within a 30 day window."

Kattner says she wishes she had applied for more scholarships.

"I was pretty stubborn, too, and I'm like, 'I'm never going to get those scholarships. I'm never going to get those grants.' And yeah, without that, that's part of the reason why I believe I'm sitting at $74,000 right now," said the 28-year-old social worker from De Pere.

An average graduate of a four-year college in Wisconsin leaves with nearly $29,000 of debt, according to The Institute for College Access and Success.

For those struggling with debt after school, financial experts stress communication with loan lenders to explore all consolidation, postponement and repayment options - especially income-driven plans.

"Unfortunately most people get into a situation where they have a hard time holding a job or finding a job, so they don't speak with their lender," said Listle. "That's the wrong thing to do. You need to speak to your lender."

He says some people have a misconception that they can do away with student loans through bankruptcy, but that's almost impossible.

"We hear people that tend to forget to pay a certain loan. Why? Because they just haven't scoured their loan summary often enough," said Listle.

That can lead to defaulting on a loan.

Experts also recommend first paying off loans with the highest interest rates and to explore loan forgiveness programs for people in some public jobs.

FOX 11 has also looked at why and how America reached $1.2 trillion in student debt and how the debt is impacting our economy. Our coverage continues Wednesday night with a look at alternatives to four-year college degrees and how technical colleges are working to fill existing needs in the workforce.

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