College v2

Unless you’re amongst the lucky few who have been able to finance your college education without the help of student loans, you’ll likely be graduating college with a pretty substantial debt. It’s a sad fact most of the times these days.  To get ahead, you need to get a college degree.  But getting the college degree also means you’ll be incurring a huge debt.  As much as I tried to avoid it, I ended up falling into this group, racking up college loans that I will be paying back for years to come.  I shudder at the thought of how much I owe.

Before you get in too deep, graduate, or get to that repayment stage, there’s a few things you can do to minimize the damage.  First and foremost, control yourself – do not take out a loan to finance your spring break.  I can’t say I did that, but I have known a few others who have, and well, let’s just say they deeply regret it now.   Another wise move is to take an honest look at what you’re paying out each year at college versus what you will make starting out in your career.  If your goal is to become a teacher, it makes absolutely no financial sense to attend a $25,000 per year school when you’ll be starting out at a $35,000 per year salary.  If your goal is to become a doctor, that same tuition can be justified as you’re likely to make a lot more than a teacher over the course of your career.

Another thing you’ll want to do, which you likely already know about, is to try to get as many grants as possible before you take a loan.  Grants typically do not have to be repaid, which is a good thing.  Loans have to be paid back, except in some circumstances.  For instance, my sister was going into Education and took some Perkins Loans.  Because of the field she was going into, there was some kind of stipulation that if she got a job in education within a certain amount of time after graduating, she would not have to pay back the Perkins Loans.  I’ve heard about similar things for those going into nursing.  So, if you’re getting one of those kinds of loans, find out if there are any special circumstances.

If you need to take a loan, be aware of what you’re getting yourself into.  It might seem like a long ways off, but graduation is just around the corner, which means repayment is as well.  Fortunately the banks and loaners seem to be somewhat understanding, and should you not be able to afford to pay them back right away, there are ways to hold off the repayment time, including forbearance and deferment.  Check with your loan institution before you decide to just not send in a payment, they may be able to help you without you negatively affecting your standing and credit history.  If you stop paying them, they won’t just forget.  You’ll get harassing phone calls, letters, etc. And eventually, if you don’t respond or pay up, they’ll hunt you down, find out where you work, and have your payments deducted automatically from your paycheck.  Oh, and they’ll leave a nasty remark on your credit report, which may negatively affect your chances of getting any future loans, whether it be for school, a car, a house, or whatever.

The state of college loans in the US is a scary one these days.  6 out of 10 students that graduate have college debt, and  4 in 10 students with loans have debt which is considered to be unmanageable.  Major college debt is delaying major life decisions in college graduates’ lives: Thirty-eight percent of college graduates currently delay buying their first house because of debt, 14 percent delay marriage, and 14 delay having kids.

Be smart, be informed, and be proactive – it’s your only shot at beating the odds and having the kind of life that you want – not one that is dictated by student loan repayments. Luckily, tomorrow (January 17th) Congress is voting on legislation that would cut interest rates on student loans in half – from 6.8% down to 3.4%.  If it happens, that will be helpful to many currently incurring debt and those struggling to pay it back.