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Avoiding excessive student loans takes work

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Avoiding excessive student loans takes work

By JESSICA WIANT
For The State Journal

Madelyn Spencer, a rising sophomore at Alderson Broaddus University, had hoped to avoid taking out any loans to fund her college education.

"I didn't want to be in debt," the Richwood musical arts major said.

Despite her best efforts, she did end up taking on about $5,000 for this year of study. She hasn't given up hope that she can still graduate debt-free, or at least close to it.

"I am trying to work through my summers and pay what I can of the loans with the money that I earn. I am also selling my old textbooks for the same reason. When I get out of school, I hope to have paid the majority of the money I owe already.

"I am also going to keep looking for more scholarships," she said, "so that maybe I'll be able eventually to eliminate the need for loans altogether."

Spencer isn't alone.

Ronda Howell, a financial aid counselor at West Virginia Wesleyan College, said she is noticing students are more leery of taking out student loans.

Perhaps rightly so.

There are more than 7 million borrowers in default on a federal or private student loan, according to reports done earlier this year by the Consumer Financial Protection Bureau. They also estimate that roughly a third of Federal Direct Loan Program borrowers have chosen alternative repayment plans to lower their payments.

When students don't pay on their loans as required, or go into default, the consequences for their credit score and their ability to borrow again, are severe, according to Howell.

Nonetheless, students are borrowing as much as ever. The report by the Consumer Financial Protection Bureau proclaimed the student loan market to be in the neighborhood of $1.2 trillion.

Sandra Oerly-Bennett, director of financial aid at Shepherd University, says students do seem to be taking on more loans as parents' disposable income is eaten up by higher priorities in a down economy.

"It's leaving a gap," she said.

The good news is that this summer, Congress approved a drop in interest rates for this upcoming year's student loans. However, the bill put new, higher caps on potential interest rates in the future.

Information for borrowing responsibly abounds on college, government and private sites, while financial aid counselors such as Oerly-Bennett and Howell remain dedicated to helping students navigate their way through paying for college.

The first step always is to fill out a Free Application for Federal Student Aid — and on time —  Oerly-Bennett said.

If students need help to do so, she says it's available for free through college nights sponsored by different institutions in the state's high schools or during College Goal Sunday offered statewide every February.

Oerly-Bennett said looking for other sources of free money is vital.

It's a lot of work, but well worth it, Oerly-Bennett said. She suggests "making it your job" to apply for private scholarships if you aren't working.

"You're going to get turned down," she said, "so apply for that many more."

Good grades will better situate students on scholarship applications but take heart, Oerly-Bennett said. Scholarships are available for students of all abilities and interests, she said.

Oerly-Bennett recommends knowing the amount of each loan and the interest rate.

Howell also advises students to learn about their options for repayment if times get tough.  Often students don't know about all the options for repayment and even deferment.