Every year — every semester, even – the price of college tuition goes up; and it shows no signs of stopping, or even slowing down. The number on the price tag continues to get more concerning, further excluding people who can’t afford it. A 2015 Edward Jones survey puts that number at 83% of Americans. 83% can’t afford the cost of a college education.
Understandably, many of us turn to student loans to cover the costs of college for ourselves or our children; and the amount we’ve borrowed is no laughing matter: 2017 estimates say there are 44.2 million Americans with student loan debt, totaling in at $1.44 trillion for the United States. Could there possibly be more going on here that the average borrower isn’t aware of?
If you’re considering applying for a student loan for yourself or your child, here are some things you should know beforehand.
1. Don’t Borrow More Just Because You Can
This is so tempting because it provides immediate relief. Even if you know you can scrape together a few thousand dollars, why not just borrow it, right? After all, you won’t have to worry about it again for another four years.
But you will have to worry about it. This is not free money; and you’ll be worrying more than you planned when you have to pay it back plus interest and your budget is already tight. Don’t borrow more than you absolutely need.
2. Know Your Grace Period
Different loans can have different grace periods; and some require you to pay interest right away while others do not. This is an added financial responsibility that might help determine what specific loans would be best for you.
3. Forbearance is an Option When Needed, but Don’t Plan on Relying on it
Forbearance is when you stop making loan payments or maybe have them lowered for a specified amount of time. Sounds nice, right? Except the interest might keep accruing. Yes, it can bring financial relief; but be clear about what’s expected of you.
4. Understand Your Responsibilities as a Co-signer
As a co-signer, you’re basically the backup if the borrower (say, your child) falls behind on payments, in which case you become responsible. If for some reason you aren’t aware that the borrower fell behind, you face damage to your credit.
5. Consider All Your Options
It’s easy to understand that many college students can’t add a part-time job on top of their already packed schedules; but have you considered work-study programs? These offer part-time jobs for students, so they can earn money to help cover the cost of their education.
And because the programs encourage a job in the student’s field of study, the student makes money and gets real life experience on the job.
One more thing to consider is reducing the amount of time you spend in school, which is very doable when you consider adding in a couple extra credits each semester or attending school through the summer semester. It might not be the most fun you’ll ever have, but it can certainly reduce your overall costs.
If student loan debt is already a serious problem in your life and you’d like the guidance of a bankruptcy attorney,