Beware of the Death Trap of Student Debt

Michael Lux Blog, Guest Post, Student Loans 5 Comments

Editors Note: Today we are happy to present a guest perspective from a former debt collector.

Too many individuals in this country have the mentality that they have to keep up with the Jones’. For students, that mentality can get them into trouble before they even earn a degree or get that first real job. As a debt collections specialist, I’ve experienced far too many individuals that take a laissez-faire attitude to entering into debt. Unfortunately, they have the mistaken attitude that a college education equates to a high debt load.

It doesn’t have to be that way. But before we look at some avenues for keeping student debt manageable, consider these sobering statistics: Student loan debt ranks second in all forms of consumer debt, only coming in behind mortgages. In fact, student loan debt now exceeds $1 trillion. In the last eight years the amount of student loan debt has risen nearly 300 percent.

However, college education doesn’t have to come with a huge debt. The following are some strategies for keeping your student loans from overwhelming you:

Get educated, before you get educated. This applies to the parents more so than their college students. Far too many individuals that I have dealt with in collections struggle with financial competence. They come from all walks of life and tax brackets. Many take out a student loan thinking just because they qualify then it must mean they’ll be able to pay it off. Haven’t we been down this same road with the mortgage crisis?

Parents and students alike need to educate themselves about the reality of debt and seriously consider what they will get in return for the amount they are willing to sign for. In reality, will the price tag for that liberal arts degree be affordable with the job you get after graduation?

Don’t take debt as a given. An education doesn’t have to plunge you deep into debt. If you are unable to afford a school without going deep into debt then consider another school. Look for other schools offering the same program along with grants or lower tuition. Take advantage of the many, many scholarships available. Even though many may only offer a few hundred dollars, they are worth applying for in mass. A small scholarship amount means that much less money you have to pay off later on.

Start saving now. Save up as much money as you can now to pay for your education. Live frugally and save up the money you make during summer break. Find a part time job during school to help with expenses. I’ve found that too many individuals have a hard time grasping the concept that saving a few dollars here and there eventually add up. That’s money that can be put towards school now that won’t come with a hefty interest charge later on.

Think ahead. A college education doesn’t equate to a job after graduation. With that in mind, look into fields of study that will land you gainful employment. Consider all your options. If you want to go into the medical field, don’t overlook two year programs that may offer a more promising career than what you’ll find with a four year degree.

Consider all options. Taking a year off to work and save up money for school may be a viable alternative to jumping into debt for an education where you don’t have a clear major in mind. It will save you money and headaches down the road. Take as many online classes as you can. They are often cheaper and offer the same credits as traditional classes.

About the Author:

Gale Newell writes about the dangers of too much debt and reviews debt settlement companies for Top Consumer Reviews. As a former debt collections specialist, she strives to educate her readers about the proper use of debt as well as the consequences of acquiring too much debt.

  • I think college choice is a huge variable. Too many students get their minds set on a college because a friend goes, they like the city or some other reason that has nothing to do with the cost. Buying “just the right amount” of education, which includes buying from an appropriate college for your goals could save thousands of dollars.

  • DebtDiscipline

    Great info. I have 3 children that are approach college in a few years and I’m banking as much information as possible.

  • I am going through college without loans, and I don’t think you need loans if you work hard.

  • MoneySmartGuides

    I think it is huge to teach parents and kids alike about what they are getting into with student loans. I had no idea what I was signing when I was 18. I just knew I was borrowing some money for college and I had to pay it bank. I didn’t understand anything else. Luckily my debt from college wasn’t a big deal and I was able to comfortably pay it off. But I think about all of the others and how much they are struggling. Education for student loans is badly needed.

  • Stapler Confessions

    I agree that taking debt as a given is a bad idea. Oh how I wish I’d never heard the term “good debt” in reference to student loans!