From "Unpaid student loan debt looms as national crisis" (The Kansas City Star, September 23):
Still, mounting student loan debt is very tough to cope with. Borrowers can be financially handcuffed to loan payments for years to come. For those with default checkmarks on their credit reports, the outlook can be particularly bleak.Ayup, particularly to that last bit.
No doubt, borrowers are feeling strained. They’ve fallen behind on their payments because they’re unemployed or earning little. For many, there’s simply too much debt and too little income.
But in some cases, grads have also managed their finances poorly.
From the conclusion:
Otherwise, the best way to deal with the federal loan program is to try to avoid it as much as possible. Some suggestions:Apart from "Tap Grandma" (NEVER!), I've been singing this song for a looong time, folks. Anybody listening?
•Readjust your mindset. Many parents and students think highly selective schools with outrageous prices mean status, identity and guaranteed employment after graduation. The reality: There are many good schools that may offer what you’re looking for at affordable prices.
•Go with the free money. Looking for merit-based aid, which doesn’t require repayment and rewards students with good grades and test scores? Then apply to schools that offer generous scholarship packages.
•Tap Grandma. If the grandparents want to help out with tuition and can afford to do so, take advantage of their generosity.
•Graduate early. Earn college credit through advanced placement classes in high school. Also, test out of entry-level classes in college.
3 comments:
I've seen you up on that box before. Your points are important for parents and kids to consider. A key bit of information is missing, however. A number of colleges, including many elite colleges, no longer make loans a part of the package. Here's a link to a list: http://www.finaid.org/questions/noloansforlowincome.phtml
If you can get in to Harvard or Williams, for example, you'll get good non-loan aid, and for many of the well-endowed schools, the annual income threshold for 100% financial aid is well over six figures.
I need to stop reading YahooGroups about homeschooling & college, the ones about the expenses are stressing me out and I am 3 years away from dealing with this, but that's really not that far away for long term financial planning, so maybe I should not bury my head in the sand.
I'm ready to throw my kid to the nearest state university and say "that's good enough" like my father did with me when I was 18. If that includes accepting credit from local community college classes done in high school, so be it. Now that we are in TX there is a great system here where the state univ have to take those cc credits. I have a cooperative good cc less than ten minutes door to door in this nice safe town (unlike the mess I had in CT with the nearest one in the armpit of the state: Bridgeport).
Instability in our economy and the poor prospects for jobs leave me worried my kids will be over-educated and unable to find a job in their chosen career. How awful would it be to walk out of college having spent $240K or more and be unemployed? It turns my stomach to ponder.
Not sure if the next house we buy in the next year should be small so we have more extra cash to save for college tuition or if it should be larger to accommodate 20-something adult kids living in it while they work full time after college is done.
I also worry our country will be such a mess we'll be forced to resort to 3 generation living with the adult married kids & their children living under the retired elderly parent's roof...I shudder to think of it...I'd prefer a robust economy where an adult can actually work and support themselves on their income not have to rely on Mommy and Daddy.
Sorry this was bleak I'm not feeling good about the economy....
As to your idea to tap Grandma hey why not? Then if they get to the point where they need a nursing home and their money is gone they can just go on Title IX earlier. I wonder how the "reach back" of their finances goes with relation to paying for college, is that limited to $10K gift per family member each year too, I bet it is. Maybe Grandma should start doling out $10K per year early on not just in the 4 years the student is in college...
I agree with Wendy the many top schools can offer packages that make it as cheap as going to an in-state university. Not always of course, but I see a lot of bright students scared by sticker prices. They never bother to apply, not realizing they might receive substantial (non-loan) aid.
I think degree choice matters as well. I don't regret the small amount in student loans I took out for my engineering degree as it paid for itself rather quickly. Though I also worked and did co-ops as well...
That's not to say I think higher education should be all about job training, not at all! However with the cost of college these days an economic assessment of value is probably in order for most lower and middle class families. I've seen friends crippled by student loans and it isn't pretty.
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