By Jo Bryan/reporter
Student loans are the No. 1 debt in America, a NE academic advisor and adjunct instructor said Feb. 18.
Randy Saleh presented The Culture of Debt on NE Campus.
“There are many factors that can deter a student from being academically successful,” said Victor Ballesteros, student development services director. “We want to equip students with the knowledge that will help them prevent or recover from financial difficulty and better allow them to focus on their academics as well as their long-term financial success.”
The average college student graduates with $30,000 plus in debt from college loans, Saleh said.
“We are living in a crazy world of finance,” he said. “Fifty-six percent of all Texas college students have student loan debt.”
Seventy percent of working Americans are living paycheck to paycheck with no savings to catch the slack. The American dream is now being funded by credit cards and massive student loans, Saleh said.
One acquires this debt in many ways. Financial aid is on the top of the list, Saleh said. Spending on transportation, an iPhone and then books drive many to seek student loans. This, however, does not prepare students financially for unexpected events.
“Your credit score determines everything,” he said. “A credit score is the price you pay for money.”
The higher the credit scores, the lower the price someone pays for a loan. Even major companies use credit scores as a way to screen job applicants, Saleh said.
Saleh recommended the debt snowball as the method for being prepared. First, students should accumulate $1,000 in cash as an emergency fund. Then they should list their debts in order with the smallest payoff or balance first.
Students should start paying off the smaller debt while maintaining minimum payments on everything else. They shouldn’t let interest rates worry them, Saleh said. Once they pay off the smallest debt, they can then roll that payment into the next debt.
“Using the debt snowball method, what would have been a 57-payment debt, now becomes a 40-payment debt,” he said.
While not for everyone, Saleh also suggested that students work ruthlessly to pay off debt quickly. He recommended living with parents, driving an older car, utilizing the debt snowball and making double, even triple payments against debt.
Saleh said the seven habits of people with excellent credit scores are 1) pay on time and never miss a payment, 2) minimize use of available credit, 3) maintain low balances, 4) have a lengthy credit history, 5) apply for credit only when necessary, 6) choose credit cards carefully and 7) monitor credit reports.
NE student Stephanie Hines received a bonus from her personal finance class for attending but said “I found the seminar very helpful. It showed me many ways to eliminate my debt quickly and keep it that way.”
Also there to fulfill a class requirement was Kristi Outhane, a NE Campus on-line student.
“I learned how to manage my debt and take steps to become debt-free,” she said.
NE student Eric Espino thought it was an interesting topic, and a free lunch was too hard to pass up.
“The information that Saleh provided is beyond valuable to everyone, not just students,” he said.
Saleh closed by saying that financial planning is not easy. There will be some pain involved, but students should be patient. Personal finance is all about discipline and changing behavior.
