Financing Your Education - Debt Is Debt

More people in this generation were able to go to college, thanks to the availability of student loans.  All a high-school graduate has to do is fill out a FAFSA (Free Application for Federal Student Aid), wait on the results, and his tuition gets magically paid in some exchange between the school and the government that he never even sees...until he graduates. 

Schools, parents, counselors and others are pushing students to attend college, because it guarantees that they will make more money in the future. Unfortunately, the student is left with the impression that the "future" is something that happens as soon as he or she graduates from college, not something that happens five or ten years after he has joined the work force.  Frequently, students graduate college with a Bachelor of Arts and cannot find a practical job, let alone one that will enable them to pay the forty to fifty thousand dollar debt that has suddenly come due. 

Here are some things students should think about before falling into the Student Loan Debt Trap:

  • Write down what you expect to be paid upon graduating from college, and compare that to actual salary figures for your chosen profession. For example, most law students were hoping to receive $65,000 to $75,000 per year starting out, but many are actually paid an average of $45,000 to $55,000, depending on where they live.  Your college's Career Services office is a good place to look for this data.  Ask yourself: are your expectations realistic?
  • Research what your tuition will cost, taking into account textbooks and supplies, health insurance, and student fees.
  • Write down the amount you can get in scholarships or Pell grants that do not have to be repaid. If this amount will cover most of your tuition, seriously consider staying away from any student loans.
  • Using the tuition and scholarship figures, write down how much of your tuition you think will need to be covered with student loans.
  • Use the student loan calculators available at the Federal Government's website to find out how much your monthly payment will be, based on how much you take out in student loan debt.
  • RESIST the temptation to take out additional loan funds to make purchases. One graduate had to join the Army because he had used additional student loan funds to subsidize the purchase of  three cars, and he could not afford the student loan payment with his History degree.
  • If you think you can swing a part-time or full-time job to help pay for college, do it, even if it just covers basic living expenses.   Anything you pay while you are in school is money you don't have to pay after you get out.

No doubt, going to college is an important time, where students grow and change and learn things about the world they would otherwise never know.  And statistically, it is true that those who attend college will earn more over their lifetime than those who don't.  But there's no reason to suffer for several years after graduating by not taking responsibility for financing your education.  Remember that student loan debt is still debt.

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