Morgan Churchill had an unconventional benefactor chip in toward her mission to pay off her student-loan debt by the time she retires: Lady Luck herself.
The 32-year-old Colorado native and first-generation college student said she was blindsided by the cost of a post-secondary degree at the University of Colorado Boulder.
“Having parents who didn’t go to college and didn’t know how the financial aid system worked, I took out loans privately for two years, which was a horrible decision,” Churchill said. “Those interest rates were out of control.”
College students in Colorado can try to avoid such pitfalls by applying for federal financial aid. During the 2015-2016 academic year, Colorado students lost out on nearly $50 million worth of federal aid awarded through the Pell Grant because they didn’t fill out the Free Application for Federal Student Aid.
Classes may have just started, but, beginning Oct. 1, Colorado students can fill out the FAFSA at fafsa.gov to apply for financial aid for next year.
As for Churchill, she’d accumulated about $45,000 in student debt by the time she graduated from CU in 2011, and worked multiple service industry jobs to keep up with her nearly $500 monthly loan payments.
She soon discovered there was an app for that.
Churchill used Givling — a trivia game that offers users a chance to crowdfund their student-loan or mortgage payments — to win $10,000 that she put toward her student debt, which, having paid it down quite a bit since graduating, now sits at about $20,000.
Average debt for students attending public colleges and universities in Colorado has leveled off and declined recently, according to data from the Colorado Department of Higher Education.
Since 2014, the percentage of Colorado certificate or associate-degree graduates with debt has gone down from 65% to 56%, with an average debt of $13,300 in 2018.
For bachelor’s graduates, the percentage of Coloradans with debt during the same timeframe remained at 69%, but the average debt decreased from $26,900 in 2014 to $25,500 in 2018, according to state data. Ten percent of bachelor’s degree graduates accrued debt more than $40,000.
“I had pretty much come to terms that I was likely going to be paying off my student loans for the rest of my working life, but if I could have them paid off by the time I was ready to retire, I was going to be pretty happy,” Churchill said. “Hopefully, now that time will come sooner.”
Churchill said she wished she had a more thorough financial literacy education when it came time to start college, and she’s not alone.
Here are other helpful tips on student loans from Julie Thompson and Justin Jaramillo, two of the University of Colorado Denver’s financial aid experts:
Exhaust your options before getting loans
Carefully fill out the Free Application for Federal Student Aid — available Oct. 1 at FAFSA.gov — to be considered for grants, work-study and student and parent loans. Then follow up with your college to fill out any additional documents by the deadline for the best financial aid package possible.
Apply for scholarships through your college, high school, community organizations and employers. If you or your family’s financial circumstances have changed, reach out directly to your school.
“We want students to speak to us if they have concerns about their awards,” Thompson said. “Sometimes it doesn’t take into account unique and extenuating circumstances like changes in employment or a parent who got injured and is out of a job.”
Do your loan homework
Consider federal aid before diving into private loans.
“Families can be tempted to borrow private education loans with lower interest rates, however loan fees, postponement of payments, repayment plans and loan forgiveness are additional factors that should be taken into consideration when selecting a loan,” Thompson said.
Studentaid.gov has information for students and parents about the different kinds of loans and repayment.
If offered multiple types of federal direct loans, Thompson said to choose the most beneficial loan first. For example, the government will pay the interest on subsidized loans during certain periods, but a borrower is responsible for paying all of the interest on unsubsidized loans.
First-time borrowers of federal loans have to complete online entrance loan counseling through the federal government.
While it may seem like something to breeze through amid busy schedules, the session provides key information about interest rates and repayments, among other information. Even better, your university’s financial aid office can talk to you about your specific financial aid situation.
“Our job is to help explain things and let the student and family make the best choice based on their unique circumstances,” Jaramillo said. “Come talk to us.”