17 Nov

Say it Ain’t So!: Student Loan Borrowing Outdoes Postgraduate Income

With the current economy in a funk, I was shocked to read a statistic in a recent Kiplinger article that a staggering 70% of surveyed parents do not figure in their student’s potential postgrad income when deciding how much to borrow for college!

Bills, Bills, Go Away

It’s true that in many cases a student loan can be one of the lowest cost loans on the market. The federal government even picks up the interest on Perkins and subsidized Stafford loans while a student is in school at least half time.
What many families forget, however, is just how quickly their college tab can add up. Students often take out loans beyond the cost of tuition and fees for other college life items like computers, dorm decor, clothes, and living expenses.  They vaguely understand that the loan bill will arrive sometime after graduation. Too many students who access student loan money spend it like they shop with Monopoly money.

…Come Again Another Day

Would you buy a $100,000 car on a teacher’s salary? No way! That’s why I find it so surprising that some parents don’t have discussions with their children about the ramifications of debt–especially if their student is likely to enter a mid- to low-paying career. It might feel good to go to a prestigious school with a high price tag for a degree in Social Work, but if you don’t plan ahead of time how to have the available cash flow or savings to pay, your student will likely be bearing a hefty weight in loans for a long time after graduation.

Building a Better Future

The first step to helping your child build a better future is to teach them to be financially responsible. They need to understand what obligations they will incur when taking out a loan (especially since student loans will be in their names, not their parents!) and how the price of their college can affect their ability to live a comfortable lifestyle once they leave those hallowed halls!

The second step to a better future?  Smart planning. Most families have many options when it comes to reducing their out-of-pocket costs for college that they aren’t even aware of–and all of these options should be explored before you or your student ventures into the world of debt.

As a licensed financial planner who specializes in college planning, I work with families every day to help them reduce their college costs and pay for college most efficiently.  Most of you would be shocked to see how much you could potentially save if you would take time to proactively plan and implement a few dozen strategies.  It can make a world of difference!  So don’t wait–start paving your college roadmap as soon as possible-the sooner, the better!

All the best,
Deborah Fox

photo: Debt & Demand 5 by woodsy

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5 Responses to “Say it Ain’t So!: Student Loan Borrowing Outdoes Postgraduate Income”

  1. 1
    Ashley515 Says:

    Hey Deborah:

    Thanks for all your great tips on money management! I know it’s such an important time right now for us as college students to be careful what we spend our money on. I know I’m broke! I happened to run into this contest yesterday, http://indebted.mtvu.com/the-challenge/, might help me pay off some of my bills!

    -Ashley

  2. 2
    Pay for College Blog » Blog Archive » Government Pursues Unpaid Student Loans Says:

    […] debt is an increasingly serious problem in our country. In fact, in November I discussed how student loan borrowing is beginning to outdo postgraduate income! Additionally, surveys in recent years have shown that many students are delaying important life […]

  3. 3
    Pay for College Blog - Tips on reducing the cost of college Says:

    […] debt is an increasingly serious problem in our country. In fact, in November I discussed how student loan borrowing is beginning to outdo postgraduate income! Additionally, surveys in recent years have shown that many students are delaying important life […]

  4. 4
    Pay for College Blog » Blog Archive » New Loan Repayment Option Helps Out Students Says:

    […] was shocked and upset when I read November’s reports that student debt was outstripping potential post-graduate income–and I am even more stunned that this kind of borrowing is becoming even more […]

  5. 5
    Pay for College Blog - Tips on reducing the cost of college Says:

    […] was shocked and upset when I read November’s reports that student debt was outstripping potential post-graduate income–and I am even more stunned that this kind of borrowing is becoming even more […]

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