Wednesday, October 22, 2008
When University graduates enter the workforce in the months following their walk down the hill, the mountain of accumulated debt may prove to be a heavier burden than they anticipated.
According to Robert Baker, Lawrence education coordinator and counselor at the Housing and Credit Counseling Institute, people are using credit reports more often to determine eligibility for cell phone plans, insurance rates and even employment.
“You’re just going to find that you have less choice in general for anything that involves a credit reference, especially for loans,” Baker said.
Baker estimated that he and other counselors at the Housing and Credit Counseling Institute saw between 40 and 50 KU students each month. He said many of them made their first visit when the six-month grace period on government student loans came to an end.
“When we see students post-graduation, often it will be at the end of summer or early fall,” said Baker, who noted that graduates who seek debt counseling were often already reaching a crisis point. “They’re seeing what that 10-year repayment schedule is. They’re seeing what their final take-home pay is going to be, and there’s a disconnect there.”
John Wade, a psychologist with KU Counseling and Psychological Services, said debt often contributed to the stress that clients at the University’s clinic were dealing with. He said despite that observation, there were no statistics pointing to debt-related stress as a primary complaint of individuals seeking psychological counseling.
“I’ve worked with clients for whom finances are a real concern and stress in their lives,” Wade said, “but I’m not sure if I’ve ever had a client whose main concern is just that. We’re stressed because we’re busy, because we’re crunched for money, because our debt is increasing, and often, those issues stay in the background.”
Baker said procrastination in dealing with debt issues further exacerbated financial stress.
“I would say that about half the clients we see wait until things are in the crisis stage,” Baker said. “About 25 percent of all former students who come in with student loan concerns, it’s not when they realize they might not be able to afford it, it’s when it’s gone into default, and now they’re in danger of garnishment or collection by a third party.”
Stephanie Covington, associate director of the Office of Student Financial Aid, is part of the Financial Literacy Task Force, a project that began in August with the goal of educating students on the use of credit and other financial instruments. Covington said that a main goal of the task force was to preempt the difficulties that a growing number of students were encountering with their debt.
“We’ve looked at what’s going on nationally and want to be proactive in determining the needs of KU students,” Covington said. The Office of Student Financial Aid recently posted a financial literacy guide on its Web site, www.financialaid.ku.edu.
“Finances are a big reason that students may drop out of school,” Covington said. “There’s a lot of data that suggests that students have, looking back, admitted to making mistakes with their money. We just want to make sure that students know what resources are available to them.”
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