Student Loans for College Are Expensive: Here’s How to Avoid Regret
Can you believe that the average cost of college tuition and fees has risen 93.2% in the past 20 years? The thought is mind-blowing. Yet, it’s oddly logical in the context of the rising student debt crisis. In the U.S., we’ve hit a staggering $1.8 trillion in student loan debt. To put it mildly, college is wildly expensive. Many students turn to student loans for college. Although many say that student loan debt is “good debt,” it never feels good to have debt looming over you. So, how do you manage hefty student loan debt (thanks, high college costs!) and avoid feeling bitter post-graduation? Keep reading for seven (7) tips to avoid regret.
Key Takeaways
College costs have skyrocketed, fueling record student debt. Tuition at public four-year colleges has risen 93.2% in 20 years, pushing total U.S. student loan debt to over $1.8 trillion.
Planning and communication can help minimize regret. Applying early for scholarships and federal aid, and having honest financial discussions with parents, can reduce the need for costly loans.
Smart borrowing and commitment pay off long-term. Staying informed about your loan amounts, working during school, and completing your degree ensure your investment leads to real financial returns.
1. Focus on Scholarships
The best way to avoid student loan regret is obviously to not take out any student loans for college. This isn’t always possible, depending on your situation, but there are other ways. Hunt for any scholarships and grants that could help you pay your college bills. Researching and applying for these opportunities as soon as possible is key. Free money is way better than the money you’ll have to start paying off almost as soon as you graduate. Trust us, that first payment comes sooner than you think.
2. Apply For Federal Student Loans
Another way to lessen potential student loan regret is to reach out early to see what student loans you could get. If you’re going to take out any student loans, your best bet is to take out federal student loans first. To do this, you’ll want to fill out the Free Application for Federal Student Aid, otherwise known as the FAFSA. Federal aid is given out on a first-come, first-served basis. The FAFSA becomes available to complete in October. Make sure you fill it out as soon as possible and repeat the process every year you’re in college. Otherwise, you could miss out on grants that don’t need to be repaid.
Because it asks for tax information and your parents’ salary information, you’ll likely need help from them to fill out the FAFSA. Sitting down with your parents to complete the form is a great way to start talking about college costs.
3. Talk Openly About Money With Your Parents
Less than 27% of parents say they are prepared to pay for all or most of the college costs for their kids. Instead of assuming how much your parents will pay for your college education, talk to them. If your parents are helping you pay for college, be open and honest. Discuss how much they’ll be able to contribute so you can know how much you’ll need to bridge any gaps. You’ll also want to know how they intend to contribute to get the full picture. Will their contributions come from savings? Will they be taking out loans on your behalf? Are they willing to cosign any loans for you?
Your parents can also help give you a realistic view of the general costs of college and adulting. Is your dream college worth the price? Will the salary of your dream job allow you to pay back any student loans for college? Use your parents’ expertise and experience to your advantage.
4. Commit to Getting Your Degree and Using It
One of the biggest regrets you can have is not finishing college and still being stuck with massive amounts of student debt. Students who drop out are four times more likely than graduated students to default on student loans, making up 63 percent of student loan defaults. If you’re not sure that you want to go to college, it may be wiser to start at a community college. That way, you can explore your interests in college without spending too much money.
One of the main benefits of going to college should be the return on investment you get from your degree. You put money towards your degree so it can net you more money in the long run. So, don’t go to college and then settle for a job that has nothing to do with your degree. That’s a surefire way to regret all the work and money you put into college. Instead, have a plan to get a job after you graduate that is fitting for your degree.
5. Work While in College
Having a job can help limit the amount you need to borrow. Incoming paychecks ensure that you can pay for college now instead of later. Making payments on your student loans while you’re in school is a great idea. It can make a big difference in how much you have to repay once you graduate, especially if you have subsidized student loans. Not sure if you can balance a job while in school? Nearly 70% of undergraduates juggle jobs and academics. On-campus jobs are ideal. But keep an eye out for any nearby off-campus jobs or paid internships that might prepare you for your dream job.
6. Know How Much You Are Borrowing
Around half of all first-year students in the U.S. seriously underestimate how much student loan debt they have. Don’t fall into that group. Not knowing how much you have taken out in student loans can lead to a very unhappy surprise down the road. When you’re applying for student loans, do your research and compare your options. And when you decide which student loans you want to take out, know how much they are and how much you’re expected to repay. Ensure you don’t borrow a cent more than you need.
If you find that you haven’t taken out enough, you may decide to take time off from school to save money for next semester. This puts you in a sticky situation, as your loans will become due while you’re not enrolled. You need to stay enrolled to take advantage of in-school deferment and avoid having to make payments. Work with your parents and financial aid advisor to ensure you have enough to cover your college costs.
7. Ask Questions Now, Not Later
There is no stupid question when it comes to student loans for college. The whole financial aid process is full of so many new words that it can feel like a different language sometimes. If you don’t understand something, speak up. Ask your parents, your counselors, and any financial aid advisors at your college to clarify any points of confusion. Because you don’t want to be left with student loan debt that you didn’t understand in the first place. That’s a regret you can easily avoid.
Disclaimer: The viewpoints and information expressed are that of the author(s) and do not necessarily reflect the opinions, viewpoints, and official policies of any financial institution and/or government agency. All situations are unique and additional information can be obtained by contacting your loan servicer or a student loan professional.
