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Articles / Paying for College / Strategizing College Debt

Strategizing College Debt

Dave Berry
Written by Dave Berry | Aug. 24, 2018
Strategizing College Debt

If you're a student, you may not be paying attention to how much your prospective colleges may cost and what kind of debt you may have to incur. Other factors of attraction and influence are likely playing in your imagination, such as prestige (whatever that means), sports (Roll Tide!), location (USC, University of Miami, etc.) or love (where your current squeeze will enroll).

However, your parents are paying close attention. Their mission is to minimize the impact of college costs on both you and themselves. This is a significant challenge in light of the cost of attending college these days. Let's take a moment to think about how expensive it is to go to college. Being a big fan of metaphors, allow me compare college costs to an aspect of road construction.

Have you ever noticed that the smaller bridges in your area have weight limit signs on them? “Weight Limit: 10,000 pounds," the warning may read. This is the road department's way of telling you how much is enough. Granted, those signs are probably showing a very conservative number. That is, if it says “10,000 pounds," the bridge can probably handle 20-30 percent (or more) than that.

I was just wondering what the cost-limit signs for colleges would look like. For example, I envision signs on their gilded ivy-covered main gates that say something like “Caution: Cost limit: $250,000." That would be how much the sticker price of a four-year degree there would soak you. On the other hand, when visiting colleges, families (especially parents) should have their own warning signs as a pronouncement to college officials.

I can see parents sitting with their high school seniors in a college information session with something big and bold like this on a large sign they're holding: “WARNING: College cost limit: $80,000." That would grab the attention of the admission department.

Of course, these are just fantasies. Colleges try as hard as they can to obfuscate their sky-high, constantly rising costs, so you won't be seeing any cautions or warnings about how expensive your years there will be. In fact, you'll have a hard time dealing with all the seductive invitations bombarding you during your college search from schools that want your application and enrollment, should they decide to accept you.

Think Carefully About Loans

In talking about paying for college, the elephant in the room has to be loans. Loans are the only way most college students can afford higher education. And, of course, taking out loans leads to an inevitability that's right up there with death and taxes in the “Life's Sure Things" category: Debt.

To me, coming out of college owing $100,000 (or more) for college loans (let alone other necessities such as a car, home, etc.) boggles my mind. You may have heard the federal government making vague teases in the past about forgiving student loan debt, but I wouldn't be placing any bets on that.

So, what's a young person to do when faced with this level of indebtedness? The answer is simple: Pay up!

There are consequences if you don't. Some graduates, probably more than we realize, view college loans as a minor annoyance, something to put on the back burner. Smart graduates view their college loan debt the same as apartment rent, car payments or credit card debt. In other words, if you miss paying on time for those kinds of bills, you could be evicted from your apartment, have your car repossessed, get hammered on your credit rating and face merciless treatment from credit card collection agencies.

A while back, I read about hard actions being taken against graduates who have back-burnered their student loan payments. Apparently, debt collectors, even those working for the federal government, can garnish a borrower's wages after they've defaulted on their debt, having failed to pay for a certain number of months. A court order allows the collectors to claim the defaulter's earnings.

Know Which Colleges Have Low Debt

Getting back to your status as a college-seeking high school senior, cost and ability to pay have to be at or near the top of your college admissions process strategy considerations. In light of that, I thought that it might be helpful for you to consider which colleges graduate their students with the lowest debt.

To do that, I turned to my prime source for college financial data surveys, Zippia.com, where you can find the article These Are the Colleges in Each State With the Least Debt. Above, I mention that location may be a key indicator during your college search. If so, then this survey should be helpful, at least in that regard, by allowing you to sample which colleges are likely to allow you to incur a lower debt load upon graduation. That's something definitely worth considering.

McLeod Brown is the research wizard who comes up with all this great data. He begins his presentation with some sobering facts:

Student debt is a huge problem in America, and it's one that no one seems to know how to fix.

However, there are those colleges that don't load you up to your eyebrows with debt upon graduating.

We've already covered the states with the highest and lowest median debt for graduates. Now we're looking at the colleges in each state whose graduates have the least debt.

Some background:

- Americans owe over $1.48 trillion in student loan debt, spread out across 44 million borrowers.

- That's $620 billion more than the U.S. credit card debt.

- The average student loan debt for the Class of 2017 was $39,400, up six percent from the year before.

- Median monthly student loan payment for borrower aged 20 to 30 years: $203.

Take a moment and ponder $1.48 trillion dollars. That's over seven percent of the current national debt! Students don't have the luxury of printing more of their own money to sustain their debt the way the federal government does. This loan debt figure is staggering.

Check This Snapshot of the Low-Debt Schools

These are the states with the 10 schools with the least debt for grads:

  1. South Carolina – Medical University of South Carolina
  2. New Jersey – Beth Medrash Govoha
  3. Kentucky – Berea College
  4. Texas – Parker University
  5. Massachusetts – Harvard University
  6. New York – United States Merchant Marine Academy
  7. Missouri – Logan University
  8. Iowa – Palmer College of Chiropractic
  9. North Carolina – Duke University
  10. Virginia – University of Management and Technology

To find out the colleges in the remaining states, check out the map above.

Finally, a few thoughts from the Brain of Dave, be it ever so humble, about this whole taking-on-student-loan-debt issue:

- Put some serious thought into why you want to go to college. Once you have decided that your life and goals will definitely benefit from a college degree, do some intelligent consideration about which school you would like to attend, along with some rational reasons about the match between you, those schools and totals costs. That should help you distill your list of candidates.

- “Prestige" wears off quickly when the bills come due. If you have to borrow heavily to attend a prestigious college, consider the “morning-after effect" of long years of heavy payments on those loans. Forward thinking can save you a lot of later grief.

- Maybe community college or a trade school is what you really need. Not all of us need a four-year (which sometimes turns into a five- or six-year) undergraduate degree. There's no shame in not going to a traditional four-year school from day one. You can always transfer from a community college. You can also go straight from a trade school to a well-paying job. Beware the illusions of prestige and tradition. Again, the cost factor looms large.

- Don't fool yourself about debt amnesty. One of the worst things you can do is sign on the line and take on multiple large loans across your college years while thinking, “Well, everyone else is doing it," or (far worse still), “What the heck? The government will eventually cancel all this debt anyway." Wrong. Wrong. Wrong! When you signed for it, you agreed to pay it back! Think before you act!

Although you may get tired of my repeated sermons about the dangers of heavy student loan debt, I feel that it's my responsibility to offer counterpoints and alternatives. Your goal should be to try every way possible to avoid becoming part of the crowd that pushes that $1.48 trillion debt figure to a nice round $1.5 trillion.

Just keep in mind this simple wisdom: Small loans now can lead to big groans later!

Written by

Dave Berry

Dave Berry

Dave is co-founder of College Confidential and College Karma Consulting, co-author of America's Elite Colleges: The Smart Buyer's Guide to the Ivy League and Other Top Schools, and has over 30 years of experience helping high schoolers gain admission to Ivy League and other ultra-selective schools. He is an expert in the areas application strategies, stats evaluation, college matching, student profile marketing, essays, personality and temperament assessments and web-based admissions counseling. Dave is a graduate of The Pennsylvania State University and has won national awards for his writing on higher education issues, marketing campaigns and communications programs. He brings this expertise to the discipline of college admissions and his role as a student advocate. His College Quest newspaper page won the Newspaper Association of America's Program Excellence Award, the Pennsylvania Newspaper Publisher's Association Newspapers in Education Award, the Thomson Newspapers President's Award for Marketing Excellence and the Inland Press Association-University of Kentucky School of Journalism and Mass Communications Inland Innovation Award for the Best New Page. His pioneering journalism program for teenagers, PRO-TEENS, also received national media attention. In addition, Dave won the Newspaper Association of America's Program Excellence Award for Celebrate Diversity!, a program teaching junior high school students about issues of tolerance. His College Knowledge question-and-answer columns have been published in newspapers throughout the United States. Dave loves Corvettes, classical music, computers, and miniature dachshunds. He and his wife Sharon have a daughter, son and four grandchildren.

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