COLUMBIA — Before she began shopping for colleges, Naomi Daugherty knew that she would be on her own when it came to financing her collegiate career.
"I come from a low-income family," Daugherty said. "My expected family contribution was six zeros."
Daugherty chose to attend MU because of the mix of scholarships, grants, work study and loans she was offered — a figure higher than what she was offered at other schools.
Now a junior studying communications, she continues to take on loans, in addition to receiving scholarship awards and work study.
She said she does whatever she can to decline loans, but "unfortunately, life happens and you do what you have to do."
Daugherty is one of more than 11,000 MU undergraduate students who took out a federal student loan for the 2013-14 academic year.
An undergraduate student will graduate from MU with an average of $19,265 in federal loan debt, according to the university's 2013-14 financial aid award guide.
Although that is less than the state average of $23,229, it is still "the price of a car," said Leanne Cardwell, assistant commissioner at the Missouri Department of Higher Education.
On average, students graduating with loan debt in Missouri and at MU fare better than students nationwide.
"The national average is more than $26,000, so I think we're doing a pretty good job of helping students keep their loan debt as low as possible," said Nicholas Prewett, director of student financial aid at MU.
For the 2013-14 academic year, the undergraduate cost of attendance at MU — the collective amount of tuition, housing, food, transportation, books and supplies and other personal expenses — for a Missouri resident with 14 credit hours is an estimated $22,964, according to the Office of Student Financial Aid's website. The estimated cost for a nonresident is $36,356.
Because of the costs, many students take out loans without considering the implications involved. Borrowing without reading the fine print has become a common practice.
"A lot of the time students are of the mindset that they want the degree and they'll do whatever it takes to get it, so they keep borrowing," said Justin Chase Brown, associate director of operations at the financial aid office.
Hannah Bland, a sophomore studying nursing, said she didn't think she would be able to attend a four-year university without taking out student loans.
"I knew that unless I went to community college I would have to take out loans," she said. "Considering how much my parents make, I knew I was going to have to."
Bland has also had to rely on financial assistance from her family to help cover rent and other costs of attendance. Although student loans cover the cost of tuition, her biggest expense, they aren't enough.
Freshman La'Davia Robinson found that despite having a diverse financial aid package including work study, grants and scholarships, she still did not have enough money to pay her costs, so she ended up taking out loans.
"I feel like it's my fault," said Robinson, who is studying journalism. "I kind of blame myself for not doing better in high school."
She said she thinks that if she had done better, she would have received more scholarship money.
Robinson said she sees loans in her future for her entire collegiate career.
Her parents are paying a small amount out of pocket, and her mother took out a parent loan. But she said they don't really talk about that.
"My parents got me in the door, but it's my responsibility to pay (it back)," Robinson said.
Students who take out loans are not always aware of the impact the loans will have on their financial future.
Daugherty knows how much her collective debt will be upon graduation. However, she said she thinks that even though she read through all of the information given to her about her loans, there are still implications that she may not even realize.
"You sign your name anyway because you need the money," she said.
Robinson also said she had reservations about taking out student loans and she isn't sure what they mean for her post-graduation.
"Some of the loans looked questionable, but I accepted it all because I couldn't afford to pay for it," Robinson said.
To help students understand their loan debt, the university's Office of Student Financial Aid started offering one-on-one advising sessions in fall 2012.
Students can sit down with a financial aid adviser, who will look at what they have borrowed in federal or private loans and calculate their expected monthly payments after graduation.
Brown said the total amount borrowed doesn't really faze students. The expected monthly payment is what gets their attention because it's one of the first times they see the real-world consequence of borrowing, he said.
The median monthly federal loan payment for MU graduates is $221.70 per month over the standard course of 10 years, according to the university's 2013-14 financial aid award guide.
The guide says 3.9 percent of MU graduates fail to pay back their loans, compared to the national default rate of 13.4 percent.
Making it count
Daugherty knows interest is steadily accruing on her student loans, consequently increasing her expected monthly payment. Closing the gap between her financial aid package and her cost of attendance is her priority.
"I can't really pay on my loans yet because I'm actually covering what's left of my tuition," she said.
To make ends meet, Daugherty has juggled as many as three jobs at once, while remaining a full-time student and staying involved in several campus organizations.
Daugherty wants to be able to fully engage with her coursework.
"If I can't produce in my (classes) because I'm working all of the time to cover my finances, that's wasting the education," Daugherty said.
Daugherty said the last thing she wants to do is waste the time she has on campus because she sees her student loans as an investment in her future.
When students invest in higher education, they're essentially buying marketability toward potential employers, Cardwell said.
By Cardwell's definition, taking out student loans is considered good debt, or debt acquired by borrowing money to generate income or otherwise increase net worth. Student loans qualify as good debt because earning a bachelor's degree will increase an individual's earning potential.
In today's economic climate, the value of education credentials continues to grow in the eyes of employers, Cardwell said.
For students such as Daugherty, the debt acquired is worth it to obtain the necessary skill set to facilitate a career.
"I'm a very involved, full-time student, which is a job in itself," Daugherty said. "I'm trying to make these four years count."
Supervising editor is Margaux Henquinet.