Avoiding Student Loan Debt


When I was in high school and learning to drive, I was not allowed to hop right into a car and get on the road. First, I had to pass a test to receive my learner’s permit (the New York version of a temps). Why did I have to do this? Because the government wants to make sure you have a basic understanding of driving and the rules of the road before you hit the streets. In this same way, we covered a lot of information about student loans in previous posts. Now that we have a working knowledge of student loans, we too can hit the streets, and get into the good stuff. The next few posts will contain advice on what you can do to minimize the debt you would take on from student loans.

I am going to begin with advice for the person who is just starting their college career. Someone who is still considering their options, trying to decide what school to go to and what degree to pursue. Obviously, since the person hasn’t started college yet, they have zero student loans. Wouldn’t it be nice if they could keep it that way, or at least graduate college with a very manageable amount of debt? Let’s look at some tips that can help a new college student avoid student loans.

1. Choose Your School Wisely

The school you go to will have a huge impact on your possible student loans, because all schools charge different amounts for tuition. As a rule of thumb, it is best to avoid private schools. Private schools are much more expensive than public schools. For the 2013-14 school year, the average annual cost for a private 4 year school was $31,231. The average annual cost for an in-state public school was $9,139. That is a gigantic difference! A degree from a private school may be more prestigious, but is it worth paying an additional $88,368 over the course of your enrollment? And that’s not counting any additional interest if you need to take out loans to pay for that tuition. For what it’s worth, no one has ever scoffed at me or turned me down because of my public school degree.

Another option to consider is community college. If going to a public school is still going to require you to take out a hefty amount of loans, going to community college first and then transferring to a 4-year school can significantly lower the total cost of your education. The average annual cost of tuition at a public 2-year college is only $3,347. Hypothetically, going to a community college for a year to knock off your core classes before transferring to a 4-year school could save you $5,792!

There are a lot of other factors to consider in picking a college than the cost. But it is an important factor, and one you need to think about.

2. Choose Your Degree Wisely

Uh oh… this is the part where I go off and make fun of liberal arts degrees, right? We’ve all heard the jokes before, so I’m not going to waste time by going into that. However, there is some truth to those jokes. All degrees are not created equal. It can be very difficult to find a job in certain fields of study. As I went over in a previous post, one of the reasons people default on their student loans is that they cannot find a job in their field and are unable to make enough money to meet the minimum payments on their loans.

Now, I want to make two qualifications to the above. The degree you choose is not the be all end all. A strong work ethic and being a good steward of your work is a far greater determining factor in your career than what you majored in. If you work smart and work hard, you can excel. However, it can be a lot harder to get your foot in the door based on your degree. Maybe you’re very intelligent and a great worker, but it could be a bit of a struggle at first to find a place that will let you showcase that.

The more important qualification, though, in determining what you’ll study is how you can use that degree for the Lord. Matthew 6:33 says “But seek first His kingdom and His righteousness, and all these things will be added to you.” As Christians, we are called to give every aspect of our life over to God – and that includes your occupation. A huge factor to consider is how you can use your degree, the education you’ve received, and the occupation you hope to have for God.

It’s not that far-fetched of a concept. In our fellowship, I know some people who graduated with a degree in computer science, and have used their abilities to help run the fellowship’s web sites (and fight off hacks from the Russians every once in awhile). Is your degree something you can make use of for the Lord?

3. Get Scholarships. As Many As You Can.

Why pay to go to school when you can be paid to go to school? That is the essence of what scholarships do. Unlike grants, which are based on financial need, scholarships are generally based on merit. A scholarship is either awarded by the university you are attending, or by a private organization. You might think that you don’t qualify for any scholarships, but that is not true! There are thousands of scholarships out there.

For example, here is one scholarship that Kent State University offers – the Trustee Scholarship. In order to obtain this scholarship, all you have to do is have a 3.25 GPA in high school and score a 21 on your ACT. For doing that, Kent State will give you $1,000 – $4,500 a year to attend their college. The only catch is, for this and for many other scholarships, is you need to have good grades. You probably didn’t want to hear another “do good in school” lecture, but you’re going to get one anyway. Working hard in high school to get good grades can have a far greater impact than what’s on your report card. It could translate into money for college, which is definitely worth putting in some extra work at school in my opinion.

Imagine if the government or other organizations were giving out free money. All you had to do was fill out some forms, and you could possibly get this money. That’s what scholarships are! There’s no reason not to fill out as many applications as you can.

For anyone considering Kent State, my alma mater here is their scholarship search tool. Check it out, it could save you a lot of money in the long term.

4. Stick With Federal Loans

You’ve picked a school, a major, and received some money in scholarships. But you still need to take out some student loans in order to pay your tuition. That’s fine – just play it smart with the loans you take.

In an earlier post, we discussed the differences between federal and private loans. It was pretty obvious that federal loans were far superior to private loans. You will thank yourself later if you stick with federal loans and avoid private loans. Get subsidized loans first if you can, then unsubsidized. If you still need to take out more loans after exhausting all of your federal loans, maybe you’re paying too much for college. Seriously. If you are set on taking out private loans, shop around. Find a loan that has the lowest interest rate. Read the terms of the contract very carefully, and make sure there is nothing in there that could come back to haunt you.

5. Take Only As Much Loans As You Will Need

Did you know the amount of loan money you are offered is in no way specific to the amount you will actually need? Most likely, you will be offered much more in loans than you actually require for tuition and other education-related expenses. Only take out what you need. It can be tempting to take out more, or even all that you are offered. It can look like you are getting free money, but the reality is you will pay for that money and then some further down the line.

Also, use your loan money for school only. There seems to be a nationwide epidemic of using loan money for non-school related purchases, as written about in this article from TIME . The author, Suzanna de Baca, puts it well “These students will be paying high interest rates for purchases they probably won’t even remember in five years.” Yeah, you could get a new computer with that loan money. But how will you feel in 5 years when that computer is now obsolete but you’re still paying back the loan you used to buy it?

Hopefully these tips have been of some help, or got you thinking about loans in a way you hadn’t before. You have your whole college career in front of you. Enjoy it, but be responsible with your loans and your money. I have met countless graduates you have expressed to me everything they wish they could’ve done differently about their student loans when they were younger. You don’t have to be like that, though. You don’t have to graduate college burdened and stressed out by your debt. The ability is in your hands.

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