Student Loan Debt Advice - Look Before You Leap

Some young people make the mistake of taking on a large amount of student loan debt that could plague them for decades to come. With the average cost of a private college education at around $35,000 per year according to U.S. News, you'd think kids would wise up. However, the U.S. college machine continues to crank out new indebted 22-year-olds each year.

Recently I've read a number of articles from financial minds who are finally starting to discuss the numerous disadvantages of going into student loan debt.

One article published in USA Today entitled "In Debt Before You Start" by Sandra Block discussed how most college seniors graduate in a bad position. They're in the hole before they even start their careers. What if they want to buy a home, or even start a business? In today's economy they're going to have to a particularly hard time achieving those goals with $50,000 or more in debt to manage. Student loan debt is an obligation that commonly lasts for decades.

Another article published more recently on CNN Money entitled "Student Loan Debt on the Rise" by Blake Ellis revealed how the average amount of debt held by recent college graduates is on the rise. The average is now $24,000. At the same time the unemployment rate jumped. Does this sound like a winning proposition for our young people?

A third article published in Kiplinger.com ("Digging Out of Student Debt" by Jane Bennet) profiled a young woman who amassed $92,000 in debts and has been working at a job paying $18 an hour since she graduated. What's ironic is that she probably could have gotten a job making a comparable wage without the college debt. The author was right on the money when she wrote, "Meet the young and burdened."

I thank the authors of these articles immensely for helping to bring this issue to the forefront, but somehow I still don't think that this issue is being publicized enough to reach the young college-aged people and their parents who desperately need the advice and information.

I sure wish someone would have warned me against student loans before I went to college. No one did, not an older person, a boss, a teacher, family or friends. I was pushed through the whirlwind of applying for and financing college with the mentality of a doe-eyed 18 year old. After all, that's what society says you're supposed to do right? Get good grades and go to the best college possible after high school.

But is it worth taking this path if you're going to end up young and burdened?

According to Liz Pulliam Weston, "Student loans are forever." In fact they can sometimes last as long as a standard mortgage loan (15 to 30 years). You should especially avoid private student loans (not funded by the federal government) because they come with higher rates and often stricter terms.

My advice to young people who are planning to go to college:

1) If you plan to go to college, do whatever you can to pay your tuition bill in cash. Get a full-time job in addition to your schooling, live on the barest necessities, and put the majority of your earnings to paying off your school costs.

2) Ask your parents or a family member to invest in your education.

3) Consider a technical or vocational school instead of college. They're often cheaper and they teach you specific skills that you can use to actually get a job. No offense to liberal arts majors, but do you think it's resourceful to go to an expensive college when you don't have the slightest idea of what you want to do for a career when you graduate?

4) Consider a state school or community college - again, cheaper and you can live at home to save money. You can always visit your friend's dorms on campus if you want or live on campus for one semester to get that "college experience." By the way, if you're worried about the stigma of going to a community college DON'T. There are plenty of folks who went to community college and end up with jobs making just as much as private college graduates (only without the debt load!).

It's too late for some of us who may already have thousands of dollars of student loan debt to deal with, but the least we can do is warn younger people not to get themselves into the student loan debt trap.

Talk to the young high school-aged kid you know in your life. Show her this or any of the articles posted or buy them a book like "The Student Loan Scam" that shows her the other side of the coin. Get her a book that shows her how to go to college without amassing thousands in debt. It's up to you to be the lone voice who says to that young doe-eyed 17 or 18-year-old high schooler - look before you leap.

Sources:

http://politics.usnews.com/opinion/articles/2010/08/24/the-average-cost-of-a-us-college-education.html

http://www.usatoday.com/money/perfi/college/2006-06-11-debt-cover-usat_x.htm

http://finance.yahoo.com/news/Student-loan-debt-on-the-cnnm-2559033401.html?x=0

http://finance.yahoo.com/college-education/article/110724/digging-out-of-student-debt

http://articles.moneycentral.msn.com/CollegeAndFamily/CutCollegeCosts/weston-stuck-with-student-loans-for-life.aspx?ucpg=3