The staggering amount of student loan debt has exceeded 1 TRILLION dollars and consistently rose from $200B in 2004 to $1.3T in 2015. Now, 8-2017 it’s $1.4T, up nearly 150% in a decade. Many of these loans are either in default or are delinquent as most students do not know about these loans and more importantly the high-interest rate they will be paying. Aggravating the issue, almost anyone can qualify for these loans with a few clicks of the mouse and sign up for just a few classes as generally, no credit checks will be carried out, no income verification, and no proof of employment is needed. This “easy credit” policy along with bad timing contributed to the housing bubble which caused the huge economic downturn in 2007-2009. I personally know a few friends, relatives and neighbors that are yet to fully recover from this.
In Adam Carroll’s; Will The Next Generation Be Broke, Busted & Disgusted? (…and how to ensure your kids won’t be.), he suggests that these steps should “first” be considered to protect your children from this type of debt.
1-Know before they owe.
In looking at what it costs to attend various schools, add up what 4-5 years of that education amounts to. Run the number through a student loan debt calculator to know the actual monthly expense. Let your child know how much that really is (i.e. that equals to a car payment, that amounts to 3 weeks of groceries, or that’s exactly the same amount as my first mortgage payment). If your child has some sense of how much it really costs in the long run, his/her decision may be impacted.
2-Apply for other sources of funding.
Scholarships and grants are very good ways of getting college paid for because the money is free. However, work is involved in applying for these awards. Students have to work, but it is one of the highest paying part-time jobs they can have while in high school. Try paying your child $5-10 for every application they complete from middle school or junior high (of course, there are awards for kids as young as 3rd grade!). By the time your kids are in high school, they’ll have become familiar the process. Visit resources like www.ScholarshipMastery.com or www.TheScholarshipSystem.com for more information.
3-Choose colleges wisely.
All Higher Institutions are competing for your business. While some compete on academic rigor, most of them are competing based on your emotional feeling while in school. In fact, we usually tell teenagers “just choose a school that feels right to you”. What ‘feels’ right may be an institution with a brand new dorm that has the highest speed internet possible, unlimited cable, and a Starbucks in the basement. (The debt from that school won’t ‘feel’ so right in 10 years.) The best to choose is a school that is based on placement rate after graduation, the quality of the internships they assist students with, and how active the school alumni department is. Employers today are looking for experience, education is expected.
4-Get community college credits early.
If you’re among the lucky ones who have a community college close to them, your child should take full advantage of it. A lot of high schools are partnering with community colleges to make sure their students obtain college credits before officially graduating from high school. If you plan well, it’s entirely possible for your child to graduate high school having enough credits to start college as a sophomore. This is like saving over $20,000 if your child were to attend a 4-year state school. Do ensure that the credits transfer to the schools your child is considering. Alternatively, if the community college your child joined has a 2-year program, he/she should knock out the next year staying at home and saving money. Employers call many community colleges today to recruit from their various programs.
5-Decide if college is the best for them, right now.
The society puts so much pressure on attending a 4-year program. High schools see their percentages of college bound students as a wonderful thing, which is if they’re prepared for it. Studies, however, reveal that 1 in 3 students dropout within their first year in college. For some, getting real life experience before attending school might be of great benefit. Don’t hesitate to encourage exploration and experimentation before running headlong into a major that will not fit your child long-term. A lifelong career has become a thing of the past. Nowadays, most people change careers (not jobs, careers) at least 3 or 4 times in their lifetime.
If your children or even you as a student have a student loan, see if a company like Credible can consolidate your loans, lower your interest rate and also save you money over the life of your loans. Watch the video at the bottom of the “Credible” page to find out how Colleen saved over $12,000 of interest from her daughter’s student loans. It only takes about 7 minutes of your lifetime to find out how much you can save! Click on my link for an additional $250 student loan or $100 personal loan refinance. Hey, it doesn’t cost any “DOUGH” to find out! Get it?