When I see the cost of college rising, I find myself wondering how I am going to be able to help pay for my own kids to go to college when I have just barely paid off my own student loan debt! Many people wonder how they are supposed to save in order to help their kids to go to college when they are still reeling from paying for their own. While our culture expects us to all have college degrees in order to be successful in the future, some people believe that there is very little help in the way of paying for those degrees except to go into debt until we are swimming and drowning in what we owe. However, this doesn’t have to be the case.
The Necessity of a Degree
There is no denying that education is an important step in making sure that we have a successful future. The American culture of recent years has been one that has said that in order to be successful, all students must be highly educated. Gone are the days of getting a high school diploma and then getting a manual labor job to support a family. If you were one of those people who never really thought about an alternative other than college, or maybe you thought that getting a bachelor’s degree would ensure a successful job or career, then you may now find yourself disappointed.
Today most people think that getting a bachelor’s degree is the very minimum necessary in order to be successful in life. However, with this line of thinking comes a great deal of cost. The cost of tuition, books, and living expenses often ultimately lead to many student loans or other types of debt. In fact, around 80% of students are unable to attend college without amassing some sort of debt or loan. But instead of assuming that student loans are inevitable, many people just need a bit of prompting and information to get them rolling on taking advantage of alternative ways to pay for a college education.
The Cost of a College Degree
Some people are shocked to learn that the average amount of student loans for those with a four year degree come in at over $26,000 for a four-year degree, and $10,000 is the average debt amount for those obtaining a two-year degree. Students who attend graduate school often emerge with a whopping $40,000 or more in debt! And those with advanced degrees in law or medicine may find themselves in debt of over $100,000. (Reference: http://www.collegescholarships.org/…)
Some people might think twice about taking out student loans if they realized it might mean that they will live with their parents for a much longer time after college. I mean, really, most college students don’t dream of the day that they graduate with that degree so that they can move…back into their parents’ basements, do they? But students who take out loans to pay for college are probably much more likely to end up in this type of a scenario than those who are figuring out ways to pay for college through grants and scholarships.
According to Air Space, a study by put on by Wells Fargo and reported by Forbes has shown that of millennials (between the ages of 22 and 32), over 40% have referred to their student loan debt as overwhelming. At the same time, at least 6 million post college Americans between the ages of 25 and 34 were living with their parents in 2011—and that number is seemingly on the rise from less than 5 million just four years prior to that. (Reference: http://theairspace.net/…)
Statistics on Student Loans
Total student loan for the United States surpassed $1 trillion dollars a couple of years ago, and many folks find that to be a depressing statistic on a corporate and individual level. According to the American Institute of CPAs (AICPA), out of students who have graduated with student loans, there are at least 60% of students who have experienced some regret over the way that they have chosen to finance their higher education. In addition, about ¾ of these students have made some sort of financial or personal sacrifice because of the existence of their student loans—including postponing marriage, delaying having children, or putting off buying a home or something else significant. (Reference: http://blog.aicpa.org/…)
Cost/Benefit Analysis for Student Loans
One of the important decisions about paying for college lies in the fact that the degrees we choose may not be able to financially support the loans we take out. For instance, a doctor or lawyer may have some sort of assurance that their career may aid them in paying back their debt. An artist, on the other hand, may need to re-think the cost/benefit and consider ways to pay for college other than loans.
This story of Alan, a Jazz Guitarist major, shows the horrors of what can happen when a student gets loans for a degree which might not lead to a promising career:
By 2009, Alan Ens borrowed about $25,000 in federal loans and $75,000 in private loans to pay for his jazz guitar degree from University of the Arts in Philadelphia.
“Six months after I got out, (one lender) was like ‘We need $600 a month. We do no forbearances, no deferments. We don’t give you a lower payment,’” he says.
Four years later, Ens works for an after-school music program…. He has kept his federal loans in check but defaulted on some of the private loans, making his debt load about $110,000. To make matters worse, some of Ens’ private loans were co-signed by his mother. One lender currently garnishes Ens’ mother’s wages, and Ens pays her back. (Reference: http://repayingstudentloan.com/…)
Instead of heading straight into student loans, Alan may have found it more effective to look into opportunities for scholarships, grants, and a variety of other alternative ways to pay for college. Checking out scholarship opportunities is an excellent way to avoid some of the struggles that people strapped in with student loans have faced.
Passing on Debt to the Next Generation
In addition to taking out student loans to pay for my own college, I never considered the fact that I would not only put myself in a world of hurt but I would also be passing this down to my kids. How can I afford to save any money to help my kids pay for college if I am still paying off my overwhelming loans when my kids are heading to college in a few years?
Michael Speck tells his story about this concept here:
“I have three degrees, including an MA and a JD. When I graduated from law school in ’99 all of the offers – with the exception of those from the upper echelon firms that essentially own you – were for little money, leaving next to nothing for living expenses. Now I am making a decent living and can pay my loans under the (Income-based repayment) program, but repayment is a distant dream. As a result, I am unable to assist my son with his education expenses (thereby effectively making the debt trans-generational), or buy a home, start my own practice, etc.
As a macro-economic problem, those of us saddled with this debt are unable to fully participate in the economy.”
Like Michael, I don’t have a great deal of money saved up to help put my own kids through college. Hopefully, however, my kids will be a bit smarter than I was by avoiding student loans and, instead, taking advantage of all of the scholarships and grants that are available to them when it is time for them to go to college in a few years.
Confessions of Student Loan Regrets
Many young students are eager to sign on the dotted line without a second thought about the eventuality of their student loan repayments. For instance, Kris Torres admits in her blog that she was very ignorant about a variety of issues related to her student loans:
Like most 18 year olds, bright-eyed and bushy-tailed, I signed my life away to loan terms that were far beyond my comprehension. All I knew was that it was “free” money that I’d have to pay back when I turned 22. I figured I’d be making bank by then anyways… so what’s the harm in borrowing cash? The source of my current financial woes, are traced back to my lack of student loan literacy. As a result, these are my student loan confessions:
1.I have $10,000 in student loan debt.
2.I don’t own a bed frame.
3.I don’t intend on owning a home.
4.I have fallen behind on my payments.
5.I didn’t know who my servicers were.
6.I didn’t know who I owed money to and how to pay them back.
7.I have anxiety about my student loans.
8.It feels like the payments are never ending.
9.After having major surgery, I have had to choose between paying my student loan bills or medical bills.
10.I don’t regret my education, but I wish I had known better when signing my loan agreement.
(Reference: http://www.mouthymag.com/… site no longer active)
If Kris was able to pay for her college education with more grants, scholarships, and other types of financial aid that doesn’t have to be paid back, she might find herself in a very different situation. Of course, owning a bedframe and a house doesn’t necessarily make her a more successful person, she may have found herself a bit more comfortable and having less regrets.
Alternative Ways to Pay for College
Obviously, from the statistics about student loans and the stories of personal regret, it is important for prospective and current students to take a serious look at ways to pay for college other than by taking out many loans. Grants and scholarships are some of the best ways to pay for college which do not have to be paid back. One of the best ways to start getting scholarships to pay for higher education is simply by taking a look at the list of available options and figuring out which ones make the most sense for you.
Although looking at a list of 1,000 scholarships might seem daunting, really just using some deductive reasoning will minimize the actual number of applications you need to fill out. Once you narrow down the prospects by geography, major field of study, gender, ethnic heritage, and other factors, you’ll find yourself with a reasonable grouping of scholarships for which you are eligible. Then it’s simply a matter of getting started!
Scholarship and grant applications that can be filled out online are particularly easy to work with. Plus, once you filled out a few of them, you may find that cutting and pasting will help minimize a great deal of the effort that you need to put into filling in the blanks. Make a goal of checking off one or two applications each day and make sure to prioritize based on application deadlines as well as the ones with the most opportunity for you.
Many scholarships which are based upon financial need require for the FAFSA (Federal Application for Student Assistance) to be filled out. Even if you don’t think you’ll qualify for federal aid, it is a good idea to turn in the application just in case. Then, if other scholarships or grants you are applying for require it, you can easily provide them with the information they need.
Minimizing the Cost of College
Part of making wise decisions about paying for college is about minimizing the amount that college costs while finding alternative ways to pay for the costs which are incurred. While people base their higher education decisions on a variety of factors, one of the many ways to consider where to attend college is to figure out which school will give you the most money in grants and scholarships. Attending a school in the state where you are a resident is often the first way to minimize the cost.
Another great way to minimize the cost is to take basic credits from a local community college while still attending high school or as a summer class. This eliminates some of the higher cost of a four year college with credits which will transfer to the school you actually decide that you will graduate from. The same Basic English class at a community college may run a fraction of the cost that it does at your private college or four-year University, even though it buys you the very same thing you need: credits to graduate.
Limiting the cost of living expenses while in college is another great way to keep students loans down and maximize the scholarships and grants that you get. If it’s possible, live with parents or grandparents while attending college, which should certainly be a consideration. Often, living in off-campus housing is less expensive than dorms, and having multiple roommates also saves a great deal of money.
Putting it all Together
Making the best decisions to make the most of college money is the key to keeping away from student loan regret and getting the best start on your successful future. Even if it seems like the future is far away, now is the perfect time to begin planning by taking full advantage of scholarship and grant opportunities and various other ways to pay for college. Make sure to fill out all of the grant and scholarship applications you can, make plans for your education which minimize the cost as much as possible, and make life choices that will keep you from having a great deal of regret.
Don’t wait until after you’ve gotten a degree to start thinking smart! Avoid the regret by beginning to plan now for your education and your future.