3 Considerations to Avoid Student Loans

At a time when student loan debt exceeds credit card debt in our nation and the national average is that students coming out of college will owe $30,000 in loan debt, it is important to have a plan before you enter college.  That plan needs to include a plan for financing long before the start of college, but even with a savings plan, there are other considerations.  So whether you have lots or little saved for college, here are 3 considerations when determining your financial capability for paying for a college degree.

1 – Evaluate your own financial resources, schools you are looking at and the total cost of a degree.  That doesn’t mean you start eliminating schools strictly because of cost.  But it does mean that you have to know what resources you currently have, consider any potential scholarship awards for sports or academics, and recognize that some degrees require 5 year programs for a bachelor degree.

2 – Estimate the cost of your education at specific institutions vs. earning potential upon graduation.  If the cost of the education far outweighs the earning potential, perhaps other schools should be considered.  On the other hand, if advanced degrees are part of your plan, then the track record of the sending school is important for getting in to advanced programs and costs for education have to be considered over a longer period of time.  If loans are part of that plan, then it is even more important to evaluate earning potential.

3 – Evaluate your position in the equation of Career Directed vs. No Direction.  Twenty years ago college costs were 400% less and students could afford to “change their mind” when declaring majors.  But now, at the cost of a college education and the risk of spending so much on something you don’t want to work at for 30 years or more, the risks are enormous.  Throw in college loans and there is a recipe for disaster.  It is no surprise that John Hennessy, President of Stanford University, addresses the fact that “debt burden” is a huge issue facing parents and students today and that “I Don’t Know” and “Changed My Mind” are the top two choices for majors as declared by culminating freshmen.  Click here to listen to his 7 minute interview on NPR.

A directed plan that helps you sort out majors can save you thousands of dollars and help keep you on a four year graduation track.  Contact me for help with your plan.