Full-year loans encourage overspending

EJ Smith

EJ SmithEvery July I become a connoisseur of grainy, less-than-stellar classical music.

It isn’t my preference— it is the involuntary toll many students pay before speaking to a student financial services representative in the heat of summer.

My reason for the call this time around was a new policy implemented that eradicated semester-by-semester private loans. The new system requires any student expected to take a full academic year to apply for a full-year loan.

These new rules already existed for government-sponsored loans, which are applied for the full year but evenly dispersed into two semester payments.

Having to decide an entire year’s financial situation at once has the potential to hinder students who rely on their refunds for transportation, off-campus housing, books and various other expenses. This new protocol stifles their flexibility and limits their ability to seize unexpected opportunities in the spring semester that might require more financial aid than expected.

Many of us do not have the ability to call our parents in the spur of the moment for hefty checks, and opportunities can be lost because of this. Accepted into a part-time internship two states away? Can’t take it. Car breaks down and in need of expensive transportation pass? Start walking. Need an extra few credits to graduate on time? Say goodbye to your summer.

Student Financial Services Director Craig Fennell told me the motivation behind the move is to increase efficiency with the process of loan applications.

“I came in and spent some time with my student loan staff,” Fennell said. “I found they were doing a lot of double work. … For a single student who knew they were going to be here for the fall and spring, they were splitting those loans in the fall and spring and having us do those two separate loans for them. That was double the work.”

Fennell’s logic is sound in the increased efficiency. I was once one of countless students left impatiently waiting for confirmation of payment and the helpful loan refunds often used for rent, books and food. Fixing that system is a positive change.

The population relying on refunds for various resources is small, making the case for those students weaker. But the importance of students seizing opportunities should be prioritized regardless of the number of students trying to do so.

A representative at the University of Pennsylvania told me that its financial aid office also accepts semester-by-semester private loans, acknowledging the logic behind both options.

When speaking with a financial service representative in July, I expressed my concerns about overestimation. The representative understood my premise of variables but said the new policy encourages overestimation, which he saw as an improvement.

Agonizing over a budget is something I have done every semester, desperate not to borrow a single dollar more than I needed. Each dollar overestimated equals a dollar students will owe the government or private bank upon graduation, with interest.

Fennell also acknowledged the flaws in the logic I was presented, clearing the air that provoking overestimation was not the objective of the movement toward full-year private loans.

The representative’s advice was not in line with Fennell’s, who advocates students err on the side of underestimation.

“At schools I’ve been with, we’ve always counseled students to ask for as little as you think you need now and you can always come back and ask for more later in the event that you actually need it,” Fennell said. “It doesn’t seem to be what Temple students prefer, for some reason.”

With student debt growing at a rapid pace, overestimation is not a feasible option. In a sit-down interview with The Temple News, President Theobald pinpointed student debt as his biggest concern in regard to student finances.

“Debt limits your options once you graduate,” Theobald said. “If you take a look at differences across students and how much debt they take on, how long it takes to get their degree is the primary deterrent.”

The financial aid office is chasing efficiency, and it’s a good aspiration, but sacrificing flexibility in the name of efficiency could play a role in harming the development of the university’s students.

E.J. Smith can be reached at esmith@temple.edu.

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