We all have heard them – harrowing tales of crushing debt borne by new college graduates who have to live at home until they are 30 because they can’t afford rent and loan payback.
The average outstanding loan debt for new grads hovers at about $40K. To my mind, this is a ridiculous state of affairs. That number means that, on average, students are borrowing about $10K per year, or about $1,000 per month in the academic year from September to June.
Do I think going to college is a good idea? Yes, for some! (Certainly, not for everyone.)
It’s an exciting time, a heady time, when young people can try to find their way while gathering credentials that will serve as a solid foundation for the pursuits of all kinds of things while they craft a life that is in accord with their true selves. (Whew, long sentence.)
Do I think young people should saddle themselves with tens of thousands of dollars of debt before they walk across the stage? Absolutely not.
So, how to avoid it? Here are a few ideas.
- Don’t be taken in by the hype of the rankings. Just do a google search on “do college rankings matter” and you will find all the information you need. So, if you get into a public university that means less debt AND a private that means a lot of debt, go to that public university and do your best to get everything out of it. Your life can be as rich and gratifying with a degree from one as the other.
- Do not go to a for-profit college! This should be a given, for goodness sake (a phrase that always reminds me of my mother). The for-profits are looking at the bottom line, so their advice and decisions do not have your best interests at heart. Despite what they say, the student is not number one on their list of priorities. Their track records are horrible. Just don’t do it.
- Figure out how much you can comfortably afford and stick to your guns. Don’t go through those four years with that horrible pit in your stomach every time you think about your monthly bills after graduation. So, how do you figure out how much you can afford? Once you have your financial aid package letters in hand, use the Net Price Calculator that every college must have on their site. Before that, look at the tuition and fees for each college that interests you, and add in approximate numbers for housing, books, food, and transportation. Once you have the cost for one year, increase it by 4% for the other three years, and add it all up. If you plan to work, imagine what you will earn for 10-12 hours per week, no more. How do the numbers look?
- Pay attention to the graduation rates at the colleges that interest you. If you are going to start plunking down tens of thousands of dollars, you want to know what percentage of students actually gets to put that mortarboard on down the road. If the numbers of drop outs are high, there have got to be reasons. It pays to delve into this a little. Ask current students, read the college newspaper, talk to faculty and administrators who might be honest with you. You deserve to know what is preventing students from achieving their goals.
- Take out subsidized loans, but try to avoid private loans, which have high interest rates and bad repayment terms. And please, parents, don’t mortgage your home!
- Consider working for a year before you go and sock away as much money as you can. Students who have taken the so-called “gap year” are far more ready for college anyway. Why not reduce the future financial burden and spend a year working, reading, resting, and working out? Getting off the endless treadmill that high school to college has become has many advantages. Financial health is but one.
- Consider colleges that have coop programs where students work toward a degree with substantive work opportunities woven into the curriculum. Students in these programs not only graduate with less debt but are exceedingly career-ready when they graduate, so they typically start earning real money right away.
- If all else fails, you can do what I did, which is to work full-time and go to college at night. It’s a slog because it takes so much longer, you are super busy both day and evening, and you don’t get that quintessential American residential college experience. On the other hand, you gain practical world experience and meet some fascinating people who also take night classes who can become lifelong friends and career connections. And you can pay as you go, so you graduate debt free. I know this isn’t a popular idea, but it can work for some. Don’t get me wrong. It’s not ideal or easy. But I went to a great public university (CUNY Hunter) and met a fabulous adviser who encouraged me to apply to PhD programs when I didn’t even know what the heck they were. I ended up getting a doctorate at an Ivy league institution, which launched my career, which has been pretty great so far. Things like this do and can happen.
If you do this financial work ahead of time, you will be well ahead of the game and set yourself up for success in the future.