Saturday, October 22, 2011

College Anxiety: Cost, Part II

There have been several stories in recent weeks and months about student loan debt rising along with the costs of a college education:

  • According to this story, the student loan debt in America now tops one trillion dollars, making it roughly equal to the amount of credit card debt out there.  However, credit card debt can be erased by bankruptcy--student loan debt cannot.
  • This story highlights how, because of large student loan debts, oftentimes for both undergraduate and graduate degrees, young Americans are having to delay or even forgo marriages/partnerships, buying houses, or having children.  The cost each month of repaying these loans makes taking any of these next big financial leaps a challenge, if not impossible.
  • In this report the discussion is about how much to borrow for your education.  The tip here is not to borrow more in total than you would make in your first year of salary in a typical job in that profession.  As the author points out, though, this can make it extremely difficult for those who wish to major in liberal arts and the humanities versus business, math/science areas, or engineering.
What is the implication for those of us who are helping the next generation of students make choices about post secondary options?
  • Students need to be aware of what the total cost of their prospective school choice will be.  College board has a great checklist of all the costs they should consider, and all universities and colleges are now required to have a net price calculator so that families can get a better idea of what the full price is really going to come to.  Several schools will also use College Board's net price calculator--check it out here.
  • Students and families also need to have a general idea of what they might make per year in a chosen field that they are considering, as this can help them to gauge what might be realistic to take out in student loans.  Websites such as www.whatsthesalary.com and the Bureau of Labor Statistics can help to shed light on what a prospective salary might be.
  • We need to share with students alternative paths to a four-year degree that could be more cost effective--check out my previous blog post for information on the military and community colleges.

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