The short answer is maybe. Borrowing money to pay for college isn’t a one size fits all solution. Taking out student loans can be an expensive venture; so if massive debt doesn’t interest you, you will want to make sure you consider ALL your options.
These options include:
Forgoing college all together
Attending a trade school instead
Attending a community college the first 2 years
Stopping at a bachelors degree
Getting a job with higher education benefits
Securing a job to reduce how much money you borrow
After all, college is a huge financial decision for many Americans. Students are all too often unable to foot the bill when it comes to a higher education and therefore take out loans to help cover the costs of attending college. The amount of debt being taken on should most definitely be considered when making the decision to apply for student loans.
The debt assumed with a college education isn’t always manageable either. Annual costs for a community college are around $3500, almost $9,500 for a public university, or $32,500 for a private university. Even more cry worthy is that the average medical student graduates with $100,000 or more in student loan debt.
Interest rates are at 4.45% right now, so do the math before you take out loans to pay for your college tuition. This simple step can help eliminate future headaches you are likely to experience due to interest accumulating debt. Also, a great reason to spend your student loan money wisely and solely for the purpose of your higher education.
It is also important to do some other careful calculations as you decide where you want to attend and what you want to be. Assuming the costs involved don’t scare you away, then it may be the right fit for you.
The sad truth about student loans
If you don’t, you may find yourself, like so many other post graduates, still paying on your student loan(s) decades later. I’m willing to bet a lot of this can be attributed to a lack of understanding how loans work and willingness to live well below their means in effort to pay off their debt as quickly as possible. Either way, young people are generally ill prepared to navigate the financial decisions that they will encounter as an adult.
Sadly, an education in personal finance is not part of a public school education. Students graduate without ever having to understand debt or how to handle debt, but are often encouraged to take out student loans, aka debt, in hopes of gaining a higher paying position.
A higher paying position, which comes in handy when trying to pay back the student loans. It is assumed that these graduates can become debt free with their higher paying job. This is assuming A LOT, since many students and graduates don’t ever seek out an education in personal finances.
The lack of knowledge in personal finances may be their downfall and may lead to chronic debt later down the line. So first off, students should educate themselves in order to make an informed decision. They should be aware of how debt works and confident in their ability to pay off debt in a timely manner BEFORE they take out student loans.
Things to consider beforehand
Most importantly, if you do decide to go into debt for the sake of a college education, be sure to finish your education and graduate. Otherwise you risk becoming a college drop out with nothing to show, but regrettable debt.
On top of that, be sure to gain a job using your degree, so that you can begin to pay off your student loan debt. Having a degree and not using it may seem a waste, if you’re not actually using it to attain a high enough paying job to pay off student loans. So get that loan paid off, so you can quickly start doing what you really want.
If by chance you already comfortable with the idea of quitting or becoming a college dropout, then I suggest you think twice about how and if you will attend college. Generally speaking it’d be a waste to exit the college experience without a degree.
What it really comes down to
The bottom line is make sure you understand the terms of the student loan before you sign. Remember who you want to be in life. Do you have it in you to live frugally, so you can pay off your loans quickly? Or do you assume debt is always going to be there, so you might as well make the minimum monthly payment?
I also hope you are prepared to make sacrifices, so that you can be like those who have paid off their debt in record time. I’m all about making maximum payments toward debt, when at all possible. Why pay more in interest than necessary? Save yourself some money by doing what you can, not necessarily what you want, to become debt free or in this case student loan free.
Have you ever taken out a student loan? Did you pay it off or are you still paying? Was it worth the cost?
Tawnya is the founder of The Dancing Dollar, a blog about frugality & personal finance. She writes about how frugal living can help other individuals & families live [happily] below their means. She & her husband are on the path to pay off their home in less than half the time. Click here to learn more.