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Student Loan Debt: It Sounded Like a Good Idea at the Time

There is so much news lately surrounding the impact of student debt. It’s affecting the ability to purchase homes, get married, start (or add to) a family, save for retirement, and more. It’s a hot topic at the Federal level, as defaults of federal loans are climbing. This is a concern for many people, and those who have yet to reach college age have some serious family financial discussions ahead:

  • Consider if college is “right” for the student. It used to be that everyone was “encouraged” to go to college, but it did not mean the guarantee of a job. Perhaps learning a trade might be a better route for some students. Trade schools and union apprenticeships can yield some excellent skilled professions such as construction, electrician, welder, emergency services, hairstyling, and more. The military may be another path toward finding a career and, in the case of the National Guard or Reserve, may enable the pursuit of an education with paid service. Many trades have unfilled openings.
  • A community college can generally enable the completion of the first two years, and numerous general education requirements, at lower costs versus many 4 year academic institutions. Many have excellent foundational programs with the ability to transfer to certain 4-year schools for the completion of the degree. A state public college or university may also help to control costs.
  • Plan early - because college costs may rise even more from here. There are many ways to automate savings to directly deposit, so that the money automatically goes into the account rather than goes home and gets spent. Start saving early so that there is time to accumulate assets. And, rather than go crazy shopping for toys and other items that children outgrow, get something smaller/more modest and seek to save the difference toward education.
  • Consider opportunities for commuting or going to school online to save room and board costs, which are often a significant portion of the annual cost. Going to school online has opened the doors of many institutions at a distance, providing flexibility in scheduling.
  • Look into grants and scholarships at workplaces, associations, organizations in which the student is involved. Look into endowments and financial incentives for certain majors. Sometimes private schools can actually be less expensive than state schools because of financial packages. Don’t make assumptions - investigate. Also consider schools which offer “no loan” financial aid, such as grants, to further reduce costs. Try and find sources of “free money” (that which you do not have to pay back) wherever possible.

While in school, consider:

  • Renting textbooks or purchasing used books. Some textbooks may also be available online versus hard copy, also reducing the cost.
  • Seeking work-study opportunities on campus.
  • Striving to begin making payments on loans to save on the interest. These payments will go right to the principal.
  • Attending student loan counseling which is often available from financial aid departments.

Hindsight is always 20/20. If you/someone you know have found yourself in significant student loan debt which is impacting the ability to do other things, consider:

  • Seeking to make payments on loans during the grace period before the loan payments begin to save on the interest and reduce the principal balance.
  • Looking to pay off the highest interest rate loans first.
  • If you find you are unable to make payments, you might seek opportunities for income-based repayments or stretching out the loan repayment schedule to make the payments more affordable, but note that this makes the payment schedule last longer and continue to incur interest.
  • Seeing if refinancing multiple loans into one payment might potentially help to reduce cost.

There is no magic formula for everyone and your circumstances may vary.

The opinions are those of the author. Seek professional advice before taking any action in regard to your finances.

 This information is provided for general educational purposes only and not as specific advice for any individual.



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