Cover Story
by Anna Gorra
About 15 percent of Multnomah students make it through college without debt.
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Financial Decisions Made in College Affect Future
Seminary student Richard Willey purchases books at Windows Booksellers.
--Anna Gorra, photo
About 15 percent of Multnomah students make it through college without debt, said Paul Griffin, senior vice president of finance and advancement at Multnomah Bible College. But the 85 percent of students who develop debt may have to prepare for years of financial repercussions. College debt not only includes scholastic loans, but also credit card bills that have been incurred while in school.
Brooke Mitts, assistant director of financial aid and loan specialist at Multnomah, said federal loans have a standard repayment term of 10 years. Payment on a $20,000 loan is approximately $200 per month for 10 years at a 3.37 percent interest rate.
Greg Hartman, a 1998 Multnomah Bible College alumnus, said, "If I wanted people to know only one thing about dealing with finances while in school, it would be this: You're going to be living with the consequences of the financial decisions you make right now for a long time -- at least 10 years and probably more."
Mr. Hartman works as the online editor for Focus on the Family. Today, Hartman and his wife struggle with paying off debt incurred from loans and credit card usage during college.
Mr. Hartman, like many other college students, took out Sallie Mae student loans. He now pays $250 monthly toward the loans. This monthly bill, he said, makes a difference in their livelihood.
"We home school," Mr. Hartman said. "My wife works as few hours as possible to add what's needed to my salary. If I wasn't paying student loans, she could work less."
Rich Willey has also experienced the consequences of debt since completing the undergraduate program. He recently entered Multnomah Biblical Seminary.
"Debt has a cost associated with it," Willey said. "For me, this was really apparent when I got married. It becomes OUR debt and factored into decisions regarding where I'd live and what job I could take."
"Student loans are like any other debt," Mr. Hartman said. "They reduce your freedom while you're paying them off because you have to plan your life around them."
"For me it wasn't so much the school debt of student loans, though those do have a huge impact, but it was the unnecessary debt I incurred," Willey said. "Buying dinner and music on credit cards, for example. Most of that stuff is long gone, but I'm still having to pay not only for the item but the interest it has accrued."
Mr. Griffin agreed. "Credit card debt usually has an interest rate of 18 percent to 24 percent," he said. "[One] result of [credit card] debt is paying a lot more for what you bought than if you had paid cash."
"My advice is to avoid [credit cards] like the plague," Mr. Hartman said. "My wife and I had one during my college years. We promised one another we would use it only for emergencies, and there were a few times when we had to use the credit card to buy groceries or get something fixed on the car."
Purchases of even small amounts on credit can easily add up. In addition to about $20,000 in student loans, Mr. Hartman also had a credit card balance of more than $7,000 to pay off after graduation. Most of the credit card bills included meals out, movies, Christmas presents and other non-necessities items "too tempting when we had a credit card to pay for them," Mr. Hartman said. He struggled, making little progress in paying off his debt.
A small family inheritance six years ago paid off the credit card. Today, Mr. Hartman and his wife are happy to say that they no longer own a credit card.
Mr. Hartman also told of a friend and fellow graduate who experiences the heavy burdens of more than $60,000 in student loans as well as $30,000 in credit card debt, all incurred while in college. Hartman's friend attended Multnomah for more than seven years.
Help is on the way, should the student choose to accept it. Multnomah offers numerous sources to aid students with financial difficulties.
"Over the last couple of years, we have had professional speakers give workshops on identity theft, spending plans, taxes, credit cards and credit reports, and other topics related to personal finances," Ms. Mitts said. "Unfortunately, most of these workshops had very low attendance, and the majority in attendance were not dorm students. We have concluded optional learning opportunities in personal finance do not rate as a priority in students' busy schedules."
Paul Griffin's Six Tips For Staying Out of Debt
- Don't take out loans for anything but school costs.
- Stay out of credit card debt by not getting a credit card at least until school loans are paid off.
- If you qualify for a subsidized standard loan and need to pay off school, take it.
- Don't postpone and stay out a semester of college to work because the tuition rates will probably go up the next year. No interest accrues until after you graduate; then the interest rate is low.
- Think of other sources of money, such as grandparents or your church. Some churches offer a scholarship program for college students.
- Go for free entertainment and shop at stores such as Target, Ross and Nordstrom Rack.
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