Rising tuition and exorbitant fees leave many future grads questioning the value of higher education. If you’ve ever tried to calculate the salary benefits of a college degree against the looming debt, you may have struggled with the same issue.
The average member of the class of 2012 left school carrying $29,400 in debt, according to the Institute for College Access and Success. Such a burden not only puts a huge dent in your post-graduation lifestyle, but studies show students who graduate with no debt are almost twice as likely to go on to graduate or professional school. If the debt becomes unmanageable, the stress can pose a threat to your career success and even damage your credit score.
No matter what stage of your college career you’re in, follow these tips for a bright and debt-free future (or close to it).
This is your opportunity to start your financial future on the right foot. When taking out college loans, don’t over-borrow. Seems easy enough, but even the most financially savvy students get blinded by the promise of easy money and low interest rates.
How much is too much? Aim to borrow less than half of your expected starting salary post graduation. For example, let’s say you’re getting an education degree to become a high school teacher. Doing your research, you discover the average salary for a high school teacher in your state is about $40,000. In this scenario, you would ideally shoot for no more than $20,000 in borrowed funds for your entire four-year education. Use a loan calculator like this one from FinAid to get an idea of what your monthly loan payments would look like.
Even if you’re not sure what you want to be, keep your costs as low as possible. Make financially sound decisions from the get-go—choose an in-state school vs. going out of state and compare the costs of your top picks to the rewards of these schools.
Also, consider enrolling at a college with a “no loans” financial aid policy. A handful of schools have adopted generous financial aid policies for low-income students, replacing loans with grants in their financial aid packages.
According to FinAid, these colleges include Princeton University, Davidson College, Amherst College, Harvard University, Pomona College, Swarthmore College, Haverford College, University of Pennsylvania, Yale University, Bowdoin College, Stanford University, Wellesley College, Columbia University and Vanderbilt University.
College Bound
You completed your FAFSA and qualified for way more than you ever imagined. It may feel like you’ve won the lottery, but beware—this money must be paid back, with interest. Before you accept it all and start stocking your mini-fridge and planning your first spring break, consider the post-college life you’ve always dreamed of. Take on all this debt, and you could be dining on Top Ramen well into your 30s.
There’s still time to snap back into the responsible college student you know you are. If you’re working part-time while in school, find out if your employer has a tuition reimbursement program. Companies like Best Buy, Bank of America and Starbucks do, and they can help you start paying off your debts before interest starts accruing.
Another option? See if your education expenses qualify you for a tax deduction. If your parents still claim you as a dependent, this only benefits them. However, if you file taxes as an independent or are married and file jointly, you may be eligible for deductions up to $4,000 per tax year, based on your income. Visit the IRS website for details and qualification guidance.
Alums
What happens after you’ve donned the cap and gown, shook hands with the dean and received your diploma? If you’re like the majority of U.S. college grads, this most likely served as your debt-ridden welcoming to the real world. Students who graduate with excessive debt often delay getting married, having children and buying a car and home—and according to Fastweb, they are more likely to be depressed.
It’s not too late to right your wrongs, but it will take a little extra work and some creative thinking. Follow these tips to get out of debt and get on with your life:
Consolidate: Keeping up with multiple loans can wreak havoc on your sanity and your wallet. If you took out private loans in addition to government-sponsored loans, consolidating your debt might ease the re-payment process. You may be able to pay off your loans faster by consolidating them into one lower-interest payment. The Federal Student Aid website provides valuable information and resources for student loan assistance. See if you qualify for student loan forgiveness on the site, too.
Cash out: Are you in a position to raise a lump sum of money that you could use to pay down your loan debt? Those savings bonds Grandma gave you on your 16th birthday could be worth a substantial payment on your loan. Even those carefully preserved comic books could be sold for big bucks on eBay.
Put in the hours: If your entry-level salary barely covers your monthly debt payments, consider side gigs to make extra cash. Think of flexible part-time jobs that don’t interfere with your career. For example, become an Uber driver and make money driving others on your schedule. You can also sign up at Sittercity to babysit, pet-sit or walk dogs for extra money in the evenings and on weekends.
Original article and pictures take www.savethebills.com site
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