What we should to tell our children about student loan debt and how to minimize it?
Students today go to colleges and universities at a very high price. The rising cost of tuition has made student loans unavoidable for many. Get the financial literacy that you need to kick discouragement and stay on top of student loans.
You may have been the first one in your family to graduate from college. Or, if it wasn’t you, it may be your child. No matter which generation it is, this is a milestone for many black families, and blacks have come a long way since Little Rock Nine.
But the difference between now and then is the cost of tuition. According to Forbes magazine, the average college student will cross the stage with $30,000 in student loans shadowing their undergraduate degree. And this is not including post-graduate degrees such as a Master’s or Ph.D.
The sense of accomplishment can wear off quickly when the first bill for student loan payment arrives. Some recent graduates may be shocked at the amount they have to pay back, and they may be confronted with these costs even before they have landed a job in their field.
If you or your child feel as though you are starting adult life and career already behind the ball because of student loan debt, don’t fret. Your degree increases your chances of earning nearly double of what you would without one.
Key points to cover
- It is important to understand the terms of repaying the loan.
- Understand the differences associated with private loans and government loans. Government loans can have a significantly lower interest rate, and one that is fixed.
- Paying on time may also qualify you with lower interest rate.
- Don’t be afraid to drill your financial aid advisor for the answers to any of your questions. Financial literacy is powerful in any situation.
It is very unusual for student loans to be wiped out in bankruptcy, but there are ways to have your loans forgiven. Your student loan can be forgiven by the government if you work in low-income areas, teach at a public school, or volunteer for programs such as Peace Corps, VISTA or AmeriCorps.
Consider a summer job to help pay for tuition – When I was in college, I had a summer job along with grants and a scholarship. Although the cost of tuition is significantly higher today, you can at least cover the cost of books and some of your living expenses with the income of a summer gig. This is bound to save you thousands of dollars over your college career.
Scholarships! Scholarships! Scholarships! – This one almost seems like a no-brainer. Apply for as many scholarships as you can. There are millions of dollars set aside to give away in scholarships. There are bountiful minority scholarships, as well as scholarships for people in a variety of unique circumstances. The money is out there, you just have to go get it!
Don’t let student loans get you down about your future. With wisdom, and a set goal you can pay for your education and pay off your loans without fear.