Today, I'm pleased to host freelance writer Vera Reed as she offers some valuable information on avoiding the pitfalls of student loan debt and some great information on where to get money. Students and parents alike can benefit from this. Having two kids in college right now myself, I can tell you it is already time to start thinking about financial aid forms again and scholarship applications! So, I'll turn the time over to Vera.
How to Avoid and Manage
Student Loan Debt
Vera Reed
Everywhere we look, from op ed pieces to highway bulletin
boards, we’re told that our future prosperity is more dependent than ever on
higher education. And yet with tuition
prices higher and higher, and the job market still in a feeble recovery state,
more and more recent graduates emerge into the workforce burdened with an
albatross of seemingly insuperable
student debt. Depending on which
authority you ask, the outstanding
balance for student loans is somewhere between $902 billion and $1 trillion,
a staggering figure at either end of the spectrum. What’s worse is that 12.8% percent of those loans are in default status -- and since
student loans are exempt from bankruptcy proceedings, those numbers are likely
to stay.
To make sure that a college education is a process of
empowerment, not one of imprisonment, be control of your borrowing at every
step of the way. Here are some broad
courses of action that will set your future on the right course.
Look Diligently for
Scholarships
While the figures are often exaggerated, millions of dollars in scholarships go unrewarded eachyear simply because applicants fail to look for them. This happens for several reasons. First, potential recipients often give up
before they start on the assumption that their high school transcript doesn’t
merit rewards. For one thing, many
scholarships are awarded not on academic performance but by circumstances such
as gender or minority status, and often in surprising ways. For example, many people don’t realize that
even partial Native American heritage opens the door for a number of awards.
In addition to overlooking the many factors that may lead to a
scholarship, some borrowers look at scholarships in an unfortunate “all or
nothing” manner. While getting a free
ride would be great, don’t forget that one or more smaller awards add up. Some of these come in the form of simple contests, so it’s surely worth a try.
There are in fact so many scholarship opportunities out there
that the search is daunting for some.
Luckily, there are a number of convenient online one-stops out there to
help your search, so check out Scholarship America, FinAid,
and FastWeb.
Borrow Conservatively
Especially for young people who’ve never had to manage their
own money before, student loans can be a dangerous thing. Though lenders are not as willing to lend as
they once were, it’s possible to borrow amounts that far exceed tuition alone,
and inexperienced borrowers can falsely
see those large quarterly disbursements as free money. By all means, if you know you’ll be unable to
work as you complete your degree, factor cost of living expenses into your
borrowing. However, because you’ll be
paying interest over years, don’t be extravagant and only take out what you
need for a comfortable existence.
Consider Work Options
For some, college is seen as four years or more of dedicated
study, free of the distractions of having a job. While
this sense of freedom is wonderful, don’t let it be at the expense of your future autonomy. With some careful time management and a part
time job, you can bring in enough income for cost-of-living expenses and lower
your total loan. In particular, see if
you can find employment within the university you’re attending: if you’re an out-of-state student, this can sometimes make you eligible for
wildly lower in-state tuition.
Look for Bargain Schools
Education should in the end be about getting skills and
knowledge with which to prosper, not about prestige. While it’s true that many “name brand”
universities offer unparalleled networking perks, you can often find comparable
professors and programs at state schools and lesser-known institutions. Instead of going by a school’s overall
reputation, check out the word on individual departments and placement rates
within the degree you’re seeking.
Similarly, if you’re pursuing a strictly career-focused technical
degree, strongly consider bypassing university altogether and gain
accreditation more cheaply - and even quickly - through an online school. You can get certified as a pharmacy technician, for example, in only a
year, while with the time you save commuting to classes can be spent working.
Finally, make sure to compare the total sum you expect to spend
with what you can realistically expect to make upon entry into the job
market. If there is a gaping
discrepancy, you may want to rethink your plans before you borrow. Should you end up owing more than you would
have liked, be absolutely sure to keep lines of communication open between you
and your lender. Student loan providers
are more humane and flexible than any others, and there’s almost always a way
to refinance or consolidate.
Vera Reed is a freelance writer from Southern California. She
is a former school teacher and loves writing about education and parenting
issues. When she’s not writing, she loves spending time with her two young
daughters.
