Ann Arbor ranks among places most affected by student loan debt

Thursday, October 31, 2019 - 3:46pm

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Design by Roseanne Chao

Ann Arbor ranks among U.S. metro areas most affected by student loan debt, according to a recent study conducted by SmartAsset, a financial technology company.

The study put Ann Arbor as number 15 in metro areas where student loan debt hits the hardest, the number one area being Gainesville, Fla. The average student loan debt for an Ann Arbor citizen is $45,668, compared to $35,359 nationally. 

A.J. Smith, vice president of financial education for SmartAsset, oversaw the research. In an interview with The Daily, Smith said SmartAsset used a team of data analysts and personal finance experts to look at 100 metro areas in the United States.

“Paying off loans can impact your financial life and your future financial goals,” Smith said. “This is the first year that we did this study to find where student loan debt hit the hardest.”

The research used five key metrics in determining the rankings. These included average student loan debt, median earnings for bachelor’s degree holders, average student debt as a percentage of median earnings for bachelor’s degree holders, percentage of tax return with student loan interest deduction and the unemployment rate for those with a bachelor’s degree, Smith said. The study also used data from Experian, the United States Census and the Internal Revenue Service in their research.

According to SmartAsset, student loan debt is the second-largest form of consumer debt in the United States. Student loan debt reached $1.4 trillion, an all-time high, in the first three months of 2019, according to data from Experian. This is a 116 percent increase from 10 years prior.

Engineering sophomore Gabi Tringali is an out-of-state student paying for her tuition entirely by herself. She has taken out federal student loans and said she will be taking out more after this school year to cover the rest of her tuition. Tringali said thinking about her future student loan debt is frightening.

“I know everyone’s like, ‘Oh, you’re going to get such a great job and pay off your loan,’ but you never know what’s going to happen, and it has put so much pressure on me to do well,” Tringali said. “You want to do well, but (having student loans) puts so much more pressure on doing well and getting internships just so you are sure that you’re going to get a job after college, or else you will be left with all of this debt and have to pay it off.”

Tringali works at Staples 16 hours a week to help pay for her tuition. She said having a job often makes it difficult to balance her time between studying and being involved with activities.

Like Tringali, LSA junior Victoria Sheetz has taken out student loans to pay for her tuition. She said she tries to keep the thought of her future student loan debt in the back of her mind. 

“As of right now, I try not to think about it as much as I can,” Sheetz said. “But it is definitely something I will think about after school, and how I’m going to pay them off, and if I’m going to be able to do so with minimal impact to all the other things I will have to pay for.”

The study found college towns are disproportionately affected by student loan debt, Smith said. The majority of cities listed ahead of Ann Arbor are also college towns, such as Gainesville, Fla., Durham-Chapel Hill, N.C. and Colombia, Mo.

Living in Ann Arbor, Tringali said she often sees issues with the cost of activities.

“On a social level, sometimes there’s times where everyone wants to go get food or go do this activity,” Tringali said. “You don’t want to say ‘no’ and be a downer because it’s Ann Arbor; there’s so much to do.”

Ann Arbor also has a shortage of affordable housing. Sheetz said the high price of living in Ann Arbor is outrageous.

“The cost of living, including rent and bills and other groceries … just to get an education at a good school is kind of ridiculous,” Sheetz said. 

The University of Michigan’s Office of Financial Aid website advises students to think ahead to the time they will begin to repay their student loans. The website also offers information on how to manage student loans after graduation, and the OFA offers walk-in appointments to help with financial planning.

Laura Rall, Rackham student and president of Affordable Michigan, will have taken out four student loans by the time she graduates with a master’s degree in May. She wrote in a statement to The Daily on behalf of herself, not Affordable Michigan, that she thought the University could play a bigger role in helping students financially plan and should put forth more effort in reaching out to students to discuss their loans and offer guidance.

“It’s easy for U-M to look at the numbers and assume that because the majority of students come from wealthy family backgrounds, that students know and understand what they are doing with loans, but that is not always the case,” Rall wrote. “There are a lot of misconceptions surrounding loans and college finances and I do wish the University would take more action in educating and guiding students through the process.”

To help manage student loan debt, Smith said it is a good idea to talk to a financial adviser to create an overall financial picture. She said it is also important to set up an emergency fund before attacking student loan debt more aggressively.

“It’s very important to run the numbers and not hide from them,” Smith said. “It’s much more empowering to actually run the numbers, take a look at them, make a plan and start taking action towards that plan, even if it’s a very small amount each month.”