Americans now owe more money on students loans than on credit cards. But many people graduate from college and struggle for years to pay back student loans. If you are a parent or student wondering if it’s worth borrowing money for school, here are some things to consider.
- Getting a degree is a smart move that can result in higher earnings over a lifetime, compared with what you’d earn with just a high school diploma. Yes, the job market is tough right now, but many employers are looking for people with college degrees. Do some research to find out what fields have a strong outlook for hiring.
- Don’t rely only on loans to pay for an education. While financial aid is available and includes loans, many students are choosing to work their way through school to avoid taking on too much debt. It is also important to search for scholarship and grant programs for which you might qualify.
- Don’t borrow more money that you can reasonably expect to earn on your first job. “It’s smart if [borrowing is] enabling you to invest in your future,” Mark Kantrowitz, publisher of FinAid, told NPR. “But if you borrow more than your expected starting salary after you graduate, you’re going to struggle to pay your loans.”
- Parents should not shackle themselves to a bunch of student loans at the expense of funding their own retirement. Not putting away money for your golden years is a huge mistake. While many parents want to help their kids through school, it is a bad idea to overdo it with parental loans if it will be a struggle to repay them.
- Attend a less expensive school if necessary. Public four-year colleges charge in-state students an average of $7,605 a year in tuition and fees, according to the College Board. Private four-year schools charge an average of $27,293 a year. Attending a public two-year college will set you back an average of $2,713 a year in tuition and fees. While attending an elite school does have advantages, there are many people who attended less expensive schools and are doing quite well in their careers.
Paying back loans
Finally, if you choose to borrow federal student loans to pay for an education, the government expects to be repaid. Student loan debt generally cannot be discharged in a bankruptcy. So if you get loans eventually you’ll have to find a way to repay them.
by Ethan Leak