Avoiding the Student Loan Trap
This is a guest post from Demetrios Sourmaidis. He is currently a writer for www.StudentDebtRelief.us whose primary objective is to educate and assist student loan borrowers on the many federal programs available to them, including loan forgiveness.
OK parents, this one is (mostly) for you. This is an exciting time; your child has just started college or perhaps is applying to schools now, getting ready to graduate and leave home soon. You’re looking at some incredibly high tuition costs, not to mention housing, transportation and meals just to name a few expenses. Before you send your child down the rabbit-hole that is Federal Financial Aid, think about what you want for your child and what may be the best way to pay for it.
The Student Loan Crisis
Right now, student debt exceeds $1.2 trillion dollars. That is shared among almost half of all American households to the average tune of $20,236 each. That amount, and perhaps even a higher one, is going to fall on your child’s shoulders after four years of school. You may have already determined that you’ll need to co-sign with your child on these loans. That means this debt will also fall on you if he or she doesn’t find a high enough paying job after graduation or is unable to pay at some point in the future.
Even if your child can cover the cost of their own student loans, what personal price are they going to pay? Due to the high amount of debt and monthly payments, many graduates are delaying starting their own businesses and purchasing their first home or new car. They just don’t have the leeway in their budgets to make those purchases. They are also putting off developing long term relationships and having children.
No one is going to argue against the benefits of getting a college education. Although no one can guarantee anymore that a college graduate will make a $1 million more than a high school graduate, the Pew Research Center did determine that they will make an average of $550,000 more than their high school counterpart over 40 years. This only equates to $264 more per week for the college grad.
Tips to Keep Student Loan Borrowing to a Minimum
It’s best to start preparing long before graduation. Many high schools offer classes now that will also count as college credit. If your child can handle the additional academic workload, then you should get them into the Advanced Placement (AP) or International Baccalaureate (IB) programs as a junior and take as many classes as possible. If your child can earn even a semester’s worth of credits now, it can mean a savings of thousands of dollars depending on where he attends school later.
If there are no AP or IB programs available, check with nearby colleges and community colleges to see if they have classes available for high school students to earn college credit. For courses like Freshman English and Introduction to Algebra, many schools with allow high school seniors and juniors to attend. Taking even a single semester’s worth of classes locally can save hundreds of dollars before graduation and moving on to a four-year college.
For most students, there is no reason not to start off in community college either. The costs are less than half those of a four year school and since the first two years of school are fairly common for most student curriculum, the credits received should transfer to almost any four year institution.
If your child’s academic record qualifies, make sure he applies for the school’s Honor and Merit Scholarship Programs. Some Honor programs will pay for a student’s academic expenses from one to four years. Some community colleges also offer these programs. Merit Scholarships cover all or part of tuition costs and in some cases, housing, food and transportation as well. Sit down and talk extensively with the Financial Aid Office where your child will attend.
Once accepted to college, check the school’s cost per hour versus cost per semester. Some colleges have a maximum rate they charge. If this is the case, then the cost for 20 hours worth of classes will be the same as 12 or 14 hours depending on what the college determines as a full load of classes. As with the AP and IB programs, if your child can handle the additional academic workload, do it. Taking those extra classes could mean graduating in just three years as opposed to four. That is a huge difference in terms of final student loan amounts, interest and how long it will take to pay it all back.
The options are there for your new college student to have a successful academic life. With good planning, your student will graduate to a bright future that’s not eclipsed by a massive student loan debt. When the time comes for repayment on the student loans, make sure you take advantage of the loan forgiveness and income based repayment plans offered for Federal Loans.