Five Ways College Students Can Lower Debt

Some media stories make it appear that most college students and recent grads are saddled with huge student loans, impossible to repay with their entry-level jobs.

There is no doubt that student loan debt is an enormous issue today, but not every graduate leaves campus with a diploma and debt.

According to the Chronicle of Higher Education, an estimated 20 million Americans attend college in a year. About 6 out of 10 borrow money to go. Not all are borrowing huge amounts either.

The Federal Reserve Bank of New York reports roughly 37 million borrowers—ranging in age from 17 to over 60—have $902 billion in outstanding student loan debt. For these borrowers, the average debt is $24,301. Only about 1% (167,000 borrowers) owe more than $200,000.

Be A Debt-Free Grad

Must a student go into debt for a college education? Isn’t there a point where the tradeoff of a college degree might not be worth the loan size and subsequent repayment for 15-20 years?

Students graduating with little or no college loans to repay are not unusual. I know several. That doesn’t mean that mom and dad paid the bill either.

Here’s how those students succeeded, and how any prospective college student can do it:

1)   Set a career path BEFORE going to college. Save that fifth year of undergrad tuition, often caused by “indecision,” dropping classes, switching majors, and putting fun before coursework. In face, some students can graduate early and save even more.

2)   Rachet down expectations. Opt for a more economical college/university instead of a pricey private school. There are plenty of top-ranked state institutions. Or, take a few semesters at a community college to get gen-ed credits.

According to the College Board, median debt at public four-year institutions is about $8,000 for those earning a bachelor’s degree, compared to a little more than $17,000 at private not-for-profit institutions and over $31,000 at for-profit institutions.

3)   Get a part-time job during college. Even working a few hours a week can greatly reduce college loan needs.

Plus, consider the side benefits—a student might also learn to better manage their time, learn to work with people, get some business skills, and get an idea of career options attractive to them.

4)   Don’t go to college…until you have the money, or can get by with a manageable loan you can repay shortly after graduation.

Incidentally, students who drop out of college and don’t get a degree struggle more with loan default.

5)   Match the risk with reward. Does the college major/future job rewards warrant the size of loans needed?

Of course, if a student is determined to become a surgeon and will soon command a six-figure salary, the student loan can be justified and will disappear quickly. However, there are dozens of careers that earn a fraction of a surgeon’s salary. According to the National Center for Education Statistics, the median income for young adults with a bachelor’s degree is about $45,000, and $37,000 for those with a two-year associate degree.

To sum it up…assuming you will have student loan debt is NOT the new normal. Consider all your options before you borrow.

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