Education

Borrowing money for college: UI program helps students figure out how much makes sense

Kelsey Ryder, associate director of financial literacy and counseling, poses for a photo at the University of Iowa Offic
Kelsey Ryder, associate director of financial literacy and counseling, poses for a photo at the University of Iowa Office of Student Financial Aid in Iowa City on Wednesday, Jan. 15, 2020. (Andy Abeyta/The Gazette)

Since its creation in 2012, the financial literacy program at the University of Iowa has helped students create budgets, learn about credit scores and borrow responsibly.

Kelsey Ryder, 30, associate director of financial literacy and counseling, said many students believe they don’t need a budget because they don’t have much money.

To which she says: “Whatever amount you have, you should know where it’s going.”

Concern about the level of college student loan debt was one of the primary reasons the program was created.

“Offices like this were starting to pop up nationwide,” Ryder said.

Many students aren’t sure how much they should borrow, and many overestimate the amount they need, she said.

Instead of borrowing the maximum allowed each year, financial literacy staffers help students determine an appropriate student loan amount based on their expenses and estimated future earnings.

“Reduction in debt is our biggest success,” she said.

Since tracking began in 2014, Ryder said, the program has helped reduce University of Iowa student borrowing by about $1.5 million each year.

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In 2018, the financial literacy program merged with the Office of Financial Aid, which made it easier to reach more students and offer more comprehensive financial advice.

Students can schedule one-on-one meetings with a staff member, who will answer their financial aid questions and help keep them on track with their overall budget.

“Financial aid is a huge part of a student’s budget and having a combined office helps get more people through the door,” Ryder said.

Staffers also offer presentations about budgeting throughout the year.

Ryder said helping students plan for the future is rewarding for her and the rest of the staff.

“We create connections with students who come back year after year,” she said. ”When someone you’ve met with before requests to schedule another appointment with you, that’s a good feeling.”

Some students are surprised such help is offered on campus.

“Most students are thinking about loans, but we also provide information about how to check your credit score and save for retirement,” Ryder said.

Staffers also help students understand something simple but crucial — knowing who to pay.

“It’s easy to mistake loan repayment emails for spam,” she said, noting that it’s important to know the name of your loan officer.

Ryder said some students have detailed plans for paying off their college loans, but others haven’t fully realized that loans need to be repaid.

With UI students leaving with an average of $28,000 in student loans, it’s essential to help them prepare to manage that obligation.

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“We generate an estimated salary based on major and calculate the percentage their loan payments will be, which helps make it more tangible,” Ryder said. Many students aren’t sure if the amount they’re borrowing is “normal,” but Ryder said the right amount differs for each person.

“It’s OK to borrow some, as long as it’s an amount you can handle.”

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