Getting a college education is expensive these days. Most people understand the importance of a college degree in today’s marketplace, but there is less understanding about responsibly borrowing money for an education. At this time most borrowers cannot file bankruptcy in order to discharge student loans, so debtors who get in over their head with education loans may have these debts disrupting their financial lives for many years to come. Here are some ways to avoid trouble with student loans:
- Don’t overestimate your finances after graduation. Many college kids think they will graduate and earn “the big bucks.” They don’t understand that jobs are hard to come by and they are probably not in high demand right out of college with no experience. Sources that publish average salaries don’t always explain what the job paid the first year. There is a big difference between a first year attorney, lawyer, doctor, engineer salary, and how much someone with these same jobs is paid after five or ten years working.
- Work during school to reduce how much you need to borrow. I understand that some degree programs are very demanding and as a result students can’t always work. But what about the summer and the holiday season when school is out? Every dollar you earn is one less dollar that you won’t have to borrow. Calculate the interest earned on student loans and every dollar that you don’t have to borrow may be three or four dollars saved in the long run.
- Consolidate your loans. Loan consolidation may allow you to reduce your interest rates or change the payment duration in order to reduce your monthly payment. At the very least it may be more convenient to make one payment each month for student loans rather that five or ten.
- Consider jobs that help you pay off your student loans. Some government jobs, like the military, will pay off your student loans if you work for them. The salaries may be lower than in other types of similar positions, but the benefits are usually very good and if it means paying off your student loans faster, then it may be worth it.