As we turn our attention from summer to fall, something very important starts to happen that really doesn’t get a lot of attention: Student loans. Students heading back to school or starting for the first time look to take on massive amounts of debt in hopes of obtaining a degree; but at what costs?
As of 2013, the average student was graduating college with about $28,000 in student debt (that’s a rate of $7,000 per year!).
If you are heading off to school and worried about student loans, here are some ways you can circumvent going into debt and thus, giving yourself a head start on your peers:
1. Work part-time through school
I promise it won’t kill you. Working through school helps you stay out of debt, increases your GPA, and gives you experience to put on your resume when you’re coming out of school. I’d take a 3.5 GPA with experience (and little to no debt) over a 4.0 GPA student with a ton of student loans (yes, they can check your credit), and no job history. Odds are though, you’d be the 4.0 GPA student with no debt and job experience. Who’s marketable now?
2. Scholarships aren’t just for high school students
There are thousands of available scholarships for college students that are just waiting to be taken. Software and app developers are creating new business models centered on making the application process for scholarships more streamline. Companies like Scholarship.com and Scholly make it easier to apply for more scholarships in a far more efficient way than before. While it is possibly a myth that billions in scholarships go unclaimed every year, there is no denying that you won’t receive any scholarships if you never apply. What do you have to lose?
3. Don’t stay on campus
It’s about 10K to stay on-campus these days. Is the experience of beer pong and keg parties really worth it? Ask yourself, can you get a four bedroom apartment for $1,200 and split it four ways? You probably can and your cost will only be $3,600 (and that’s for the entire year). Granted you’re not counting food costs, internet, or drive time, but if you find a place close to the school and use public transit, you’ll come in at about 50% of the 10K figure. Still too much? There’s nothing wrong with living at home, unless your parents don’t want you there. If you do live there, don’t do it forever, not a good look.
4. Rethink your school choice
Arguably the biggest budget killer for parents and students is school of choice. If you are going to a $30,000/year school and you live next to a state university that is only $9,000/year, why go to the more expensive school? Studies have shown that your school of choice has little to no bearing on your job scope once you’re finished with school. That’s an $84,000 savings over four years. Where you go matters; not for your future job potential, but definitely for your wallet.
This is crunch time. The decisions you make now will determine what happens for the rest of your life. Do you want $28,000 worth of debt for four years? Or do you want to work hard, get a job, and make smart choices? The latter will give you a much better life out of the gate. The former will restrict your decisions in your twenties and into your thirties. As always, it’s your choice though.
Lastly, for parents who might not have kids who are near the college age, start thinking about cost and how you are going to fund it. If you’re 10 years away, there’s no reason you can’t get out of debt, put together some savings and at least model what financial stability looks like for your kids.
Parents, you may not have enough to help them financially through school, but you can be there to help them apply for scholarships, learn the value of hard work, and make a wise choice for the college they attend. How you handle your kids’ college planning impacts the next generation in a big way. Invest in your kids’ future, it’s one of the best investments you can make.