Jake Zalac, For The Miami Student

In this year’s State of the Union Address, President Barack Obama vowed to assist those with crippling student debt by limiting monthly payments.

“We’re offering millions the opportunity to cap their monthly student loan payments to 10 percent of their income, and I want to work with Congress to see how we can help even more Americans who feel trapped by student loan debt,” Obama said in the address.

With the promise from the President of low loan payments, and the Free Application for Federal Student AID (FAFSA) due June 30, Miami University students on financial aid begin to wonder how much they will pay after graduation.

The answer is, according to Brent Shock, Miami’s director of financial assistance, is around $300 a month, which is the national average loan payment a student will pay after graduation. But this could differ for Miami students depending on their income. According to several surveys conducted on the class of 2012-2013, the majority of employed alumni reported salaries between $30,000 to $59,999 in their first year.

In 2012, 55 percent of Miami students were receiving some form of a student loan, Shock said. The national average of students receiving student loans in 2012 was 71 percent. This was higher than Ohio’s average of students receiving loans, which was 69 percent. Ohio is the ninth highest in the nation in terms of student debt post-graduation.

“This could be because the state focuses more on improving higher education rather than enhancing aid provided to those that would be attending,” Shock said.

In 2012, Miami students graduated with an average of $27,817 worth of debt, Shock said. However, in the past four years, the average amount of debt of all Miami students increased by only 4.6 percent, which, according to Shock, is the lowest among all Ohio schools.

“I really think [Miami] has done a great job of keeping the rate from increasing more than it did,” Shock said.

The school with the highest increase is Ohio State University, coming in at an increase of 43 percent.

Sophomore Erik Weaver has received loans since his first year at Miami. He said he is aware of all the rules and stipulations that come with the responsibility of handling student aid, including the established six-month grace period after graduation.

“You just have to stay up-to-date on these things in order to know how to prepare for it after graduation,” Weaver said.

When requesting a loan, he explained, students are asked how much they want. However, how much they actually need for a given timeframe, such as a semester, is not assessed.

“Loan debt is the worst when people take out a loan for multiple years’ worth of tuition at a time rather than by year or semester,” Weaver said. “That’s when the interest payments skyrocket.”

He also said he utilized the option of a pay-as-you-go plan, allowing students to make monthly payments while still in school to ease the debt after graduation.

According to Shock, the real difficulty comes not only in repaying the loan, but also in the supplemented interest associated with it. The national average loan payment after graduation is about $300 per month based on a 5 percent interest rate over a period of 10 years.

Weaver said the interest rate could be the most daunting aspect of the loan payment.

“I recently saw my interest rates get raised by 3 percent,” Weaver said. “In the end, it’s the interest payments that put on the most pressure. After graduation, my interest payments will be close to a third of the initial loan cost.”

According to Shock, the current interest rate for a federal loan is 3.8 percent. In a Sept. 2013 Miami Student article, Shock also noted that 95 percent of Miami students will graduate and be able to pay back their loans in a timely fashion. However, some graduates may face a scenario in which they cannot pay back their loans, called default.

“The worst case scenario would be a default on the loan which although uncommon, has the largest impact on credit score and is not forgivable under bankruptcy,” Shock said.

However, he said default is rare because the government tends to work with those in debt if they show effort to pay off the debt on a consistent basis. Other consequences of a student loan default include the loss of eligibility for future financial aid, he said. The government also then obtains the right to garnish wages and tax refunds, a repercussion not associated with other forms of debt.

Shock also commented on how the debt accumulated by loans after graduation may deter students from attempting to obtain a loan for education.

Miami alumnus Devin Bachman, who graduated last May, is now paying back his loans each month. While he said he was aware of his debt during his time at Miami, it became more of a harsh reality after graduation.

“Although you know how much you’re going to have to pay, you just can’t seem to avoid it,” Bachman said. “It still seems extremely overwhelming even after graduating.”

He added that being conservative with spending and constantly having a source of revenue is key to successful and timely loan payment.