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The Big Burden: Student Loans

By Will from Holland

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College should be the experience of a lifetime! Living on your own, having wicked fun with your college friends and roommates. Not to mention, the concept that a college education can increase your income potential for life. Excellent.

But there's one big problem if you have to borrow money to pay for college; you may be setting yourself up for decades of debt. And having problems paying back that debt could make decades of your life unpleasant. Check out these realities:

More and more young people are having to pay for college themselves, or have to pay a bigger share themselves, rather than relying on their parent's help. Because of the current economic crisis, many parents are living on smaller budgets and may have reduced income themselves. Therefore they have less money to help their kids.

The average amount of college-related debt per student is increasing. According to the College Board, a student studying for a 4-year Bachelor's Degree will graduate with an average debt of:

  • $8k from a public educational institution,
  • $17k from a private not-for-profit institution, and
  • $31k from a for-profit institution

And those are really low debt numbers for many students. But whatever the amount of debt, here's the bad news:

It's harder to get a good job now—even with a college degree. That's forcing more of us to take low-paying jobs and move back home before we're 30.

So, what can you do?

Get really practical; look for ways to cut down your future college debt before you even choose a college.

  1. First, don't be blinded by the thought of a "big deal" college or university.
    For most of us, graduating is what matters, not where we graduate. A four-year state college will probably have the same effect on your future income as that pricey private school.

    And even if you feel like you just have to graduate from one of those big-deal schools, think about spending your first two years at a technical or state college and then transferring to your dream school.

    Read my article on tips for finding less expensive—but good—schools.
  2. Next step: whatever school you choose, develop a money-saving plan before you head there.
    • Scammers love rookie college students and taking your money.
    • Schools offer plenty of opportunities to eat and live relatively inexpensively.
    • Used books are cheaper than new and you could even consider renting the books you need.
    • Finding the right roomie vs. the wrong one can save you a bundle. Make sure if you're renting a place with other people that the individuals are reliable and responsible, especially with money! Here is more on finding the right roomie.
    Also check out my article for developing a smart school plan.
  3. Finally, dig into two helpful tools we've developed for you.
    "Who Needs Money?" is our video-driven lesson on college preparation.
    • Where should you get your loan? Some college loan sources are ripoffs; yet some are fair. Learn how you can find the best loan for you.
    • You may qualify for other types of financial aid. Find out if you do.
    • Learn how to pick the most cost-effective school.
    "Who Needs Money?" will get your brain ticking. Check it out!

College is supposed to lift you up, not drag you down. Don't sink yourself in college debt. Think long and hard before committing big money to a student loan. If you borrow at all, be sure to borrow smart!

Cheers, Will.