College costs grew at four times the rate of inflation over the past generation, and it was due to a mix of factors ranging from the belief everyone had to go to college to education loans given without regard for the ability of students to repay. Student loan debt topped a trillion dollars in 2012 and reached 1.3 trillion in 2016. While college costs will only come down when parents and taxpayers demand universities shed useless departments, administrators and otherwise reduce costs, here are three ways to keep your student debt under control.
Solutions for Current College Students to Keep Student Loans under Control
If you are currently in college, don’t be one of the third of college students who use student loan money to pay for a Spring Break trip. You’ll sacrifice your standard of living for several months after graduation to pay back that one week trip. Better yet, work Spring Break so you don’t have to borrow as much money in the first place.
If you have finished your bachelor’s degree, do not hide in a master’s program in the hope your job prospects will improve. The only exception are those degree programs with a proven track record of higher pay, such as earning a master’s degree in psychology to become a counselor, nurse practitioners earning tens of thousands more per year, and those earning a master in taxation being on the fast track to high paying jobs and CPA certification.
Delay Before You Start Considering Deferrals
Student loan deferrals let you stop making payments for a time before you have to start making them again. This should only be considered in light of true hardship, such as when you don’t have a job. However, deferrals come with a cost – the overall amount increases because interest continues to accrue. If you do need a deferral, apply for the shortest time period you need so that you can resume making payments against the principal as soon as possible.
Research Options Before You Go Back to School
One reason why student loans are out of control is because employers use degrees as a minimum requirement to be considered for job categories. Unless you are earning a valuable degree from an Ivy League school, there is no point in attending a private university unless they are giving you scholarships to defray the entire cost.
And don’t count loans as student aid, since this will come back to bite you later. You should consider getting an online degree, since this may cost less than attending the local public university and give you the schedule flexibility that guarantees you’ll finish the program. Only earn an advanced degree that will result in significantly higher pay in the workplace, like an online master in taxation degree, MBA, nursing anesthesia degree, or master of logistics.
If you do have to go back to school later, only earn a degree that has a high return on the investment.