Do you know that total outstanding student loans crossed one trillion-dollar last year? Do you know that Americans now owe more on the student loans than credit cards first time in our nation’s history? Do you know that just over the last decade, borrowing has more than doubled? I didn’t until I researched as I have two daughters attending college this year.
In contrast to my belief, I found out that college fees are increasing at a clip of 8% at public universities due to lower government assistance and rising cost to run these universities.
There is no dearth of student loans horror stories you can find on the internet; many college graduates are finding difficult to find a job in this tough economy with more than $100,000 in student loans before even starting to earn any income. That’s awfully painful way to begin a career. These statistics are startling — both for prospective students, and their parents.
This revelation lead me to think how to deal with the rising average cost of college tuition yet making sure that my daughters can attend college and earn a degree that provides income worthwhile for the cost of the college tuition.
It’s a two edge sword — investing in an education is must in this competitive market yet piling up huge debt is sure way to invite financial stress.
There is always a way when there is a will. All you need to do is to do research and know your options as there are many ways to earn a college degree without jeopardizing your financial freedom.
All degrees are not created equal.
The research that I’ve done myself has revealed a common problem — many of these college graduates who have found it difficult to find a job after spending thousands on a degree have done a poor job of selecting a degree that has less competition and higher demand.
Like anything else in life— you should pursue what you love — but sometimes, it is essential to develop love for what is in demand. If you earn college degreesthat are in demand from a public university, you are likely to make 300% more than a Counseling and Psychology degree from a private university. Why not pursue a degree that is in demand? It’s obvious that employers will pay more for what they consider important to their success. All you have to do is to research what degrees are in demand and then narrow down the list to those degrees that inspire you most. You should never borrow more than your expected first year’s salary to get a degree. If it costs more than your first year salary, you should consider another degree from your selected list of degrees in demand.
Find ways to avoid debt.
On average, public college costs consume 18 percent of family median income; community college costs consume 10 percent of family median income; and private college costs consume over 40 percent of family median income. Most of the prestigious tier-1 and tier-2 universities allow students from an accredited community college to complete four-year degree. You can save a great deal of money by completing two years at the local community college which costs, on average, $2,963 compare to $28,500 to attend a private non-profit university. You can save over $60,000 just in tuition cost by following this simple strategy. Your goal should be to graduate from a well-known university with a degree in demand without carrying a great amount of student loan debt.
Find creative ways to pay for the college.
When it comes to college tuition —be proactive to find a degree that can earn higher salary and, more importantly, to find creative ways to pay for the tuition without incurring debt. The average cost of college tuition is rising but, by the same token, federal grant has gone up over the past decade as well. The first step is to file FAFSA which stands for Free Application for Federal Student Aid. FAFSA represents a snapshot of your family financial situation. And based on that assessment, You will receive EFC or Effective Family Contribution. This is the amount that federal government expects your family to contribute towards your education costs. Not filing FAFSA will put a huge dent on your ability to receive federal government grants like Pell Grant.
College degree is still very important to have a career that can pay you higher income. So, despite the rising average cost of college tuition, you should never take an easy route to drop out unless you have talent or you are as smart as Bill Gates.
I’d love to hear your thoughts and provoking ideas to deal with this issue especially if you have young, growing children.