As many University of Memphis students graduate this fall, most will have to face paying off thousands in debt that has built up during their years in college.
U of M graduates face an average of $27,002 in student debt, with 67 percent of 2016-17 graduates having debt, as opposed to the Tennessee state average debt of $25,252, with only 56 percent of graduating students having debt, according to the Institute of College Access and Success. The only public four-year university in the state with a higher average debt for graduates than the U of M is the University of Tennessee at Martin.
U of M finance professor Jeff Black said the best way graduating students can pay off debt is by holding off from excessive spending.
“My main advice for seniors with student debt is to plan for the payments,” Black said. “Students receive a six-month grace period before they have to begin monthly payments. Don’t buy a car and get an apartment and then four months later realize that you don’t have enough money to make student loan payments and eat.”
Black said it is best for students to pay as much off as they can as early as possible.
“Paying more money sooner, rather than later, will always save money in the long run,” Black said. “But you also don’t want to pay more than you can handle and be left broke and racking up credit card debt.”
U of M finance professor Allen Carrion said the ability to pay off student debt depends on whether students start their careers after graduating or come back to school.
“It depends on what your plans and resources are after college,” Carrion said. “If you’re going to grad school, you’re going to have one answer. If you’re starting a career close to your expected salary right away, then it’s going to be a different answer.”
Carrion said the time it takes to pay off loans depends on the financial situation of the student.
“It is best to pay off your other debts first,” Carrion said. “Unfortunately, there’s not a one-size-fits-all answer.”
Carrion said if students are unable to get a job after they graduate, the best option is to stall on paying loans as long as possible.
“Defer as much as possible,” Carrion said. “Your balance is going to grow, but it is the best you can do.”
Carrion said graduates must keep a balance between paying off loans and saving money in case an emergency arises.
“Best case scenario, you plan ahead and find your other expenses based on your income,” Carrion said. “Life happens; emergencies happen. The easy answer is don’t spend all your money on discretionary items.”
Music education major William Wilson said he already has a plan to pay off his debt once he graduates.
“I plan to teach,” Wilson said. “There’s ways to get out of debt when you teach because they’ll forgive you. So far, I have $5,000 in debt, which isn’t bad because I had help.”
