How to minimize student loan debt
December 6, 2011
By Victoria Ahmadi
Debt among college students in America has been a consistent dilemma for decades and is currently one of the major topics surrounding the Occupy Wall Street movement.
With a society that demands higher education more now than ever, how can students achieve an education without putting themselves in the hole for centuries to come?
For the first time last year, student loan debt exceeded credit card debt, and according to the New York Times, is likely to top $1 trillion this year. There isn’t a clear answer of how to eliminate student loan debt but there is a simple solution to minimize this debt.
Creative education allows students to look at their college education as a menu of options rather than a one-way ticket. In battling student loan debt, community college can be the golden ticket.
Zac Bissonnette, author of “Debt-Free U”, says that the biggest mistake that students make is worring far too much about where they’re going to go and not nearly enough about how they’re going to pay for it.
“I think there’s a problem in thinking that college has to be the best four years of your life,” Bissonnette said. “If the best four years of your life puts you in so much debt that you can’t pursue the career that you want, you can’t have a family, you can’t buy a house, then that’s the worst four years of your life.”
According to the College Board, four out of 10 graduating high school students start their college careers at community colleges and two-year colleges are the largest and fastest-growing sector of higher education.
Helen Williams, director of communications at Highland Park High School says that the number of HPHS graduates enrolling in community colleges has remained consistently low over the last eight years, ranging from 3-7 percent.
“In 2010, only 5 percent of our graduates attended community colleges,” she said.
In the spring of 2011, 98.6 percent of HPHS students reported that they are pursuing college studies, and many plan to pursue post-graduate degrees.
“Students tell us that there are a number of factors that play a part in their decisions,” Williams said. While financial expense is certainly a significant consideration, they also look for a university that offers a strong program in their area of study,” Williams said.
Perhaps students must take a closer look at what they’re getting themselves in to. With the rise in college tuitions nationwide, some as high as $51,000 per year, students seeking loans must begin to look at their college education as a business deal.
College undergraduates are graduating with diplomas from desirable institutions but are set back by student loan debts of more than $100,000. With the slump in employment and the competitive job market this raises a completely new issue- is college a business decision rather than an experience?
A New York Times article revealed that many of those in debt would still be paying off their fees when their own children are going off to college.
Community college may be disregarded as an option considering that high school graduates are often wrapped up in the superficial ideas of college and want to go to one university and graduate after four years. The first two years of one’s college education is composed of basic mandatory courses so why not spend a fraction of the money and enroll in a community college right out of high school?
Chelsea Martin, 22, of Dallas said that she had no other option than to begin higher education at a community college.
“Of course I wanted to go to a university with the rest of my friends to embrace the ‘college experience,’ but financially it wasn’t a smart move,” she said.
Martin is currently enrolled at Brookhaven College in Farmer’s Branch, where she plans to earn her associates degree in nursing before transferring to a four-year college.
“As far as my student loans go, I don’t even want to think about how I am going to pay them back,” she said. “It is really stressful working full-time and never catching up with my student loan debt.”
Martin said that she has racked up nearly $13,000 in student loans after enrolling in miscellaneous classes that won’t transfer to a university or don’t count toward a nursing degree.
The issue of non-transferable courses can be eliminated if a student makes a game plan for him or herself before their college career. It is essential that prospective college student know where they want to finish their college career so that they can take the mandatory steps to get there in a cost effective way.
For instance, a 12-hour semester at Southern Methodist University is priced at $17,495 in addition to a general student fee of $2,220 whereas the same semester at a Dallas County community college would cost $1,620.
A student could save a nearly $18,095 a semester by postponing their education at a university until their junior and senior year. You get the prestigious diploma and save thousands of dollars; it’s a win-win situation.
When looking at the larger picture, a student transferring to SMU after completing two years at a junior college would end up paying roughly $82,000 rather than $157,720. Community college would end up saving this student $75,720 in school loans.
These numbers speak for themselves. It is important to take into account the average income of college graduates.
According to the National Center for Education Statistics, the average college graduate with a Bachelor’s degree earns between $40,100 and $51,000 per year. Not to mention the fraction of graduates who are unemployed and in debt hundreds of thousands of dollars.
It is inevitable that with minimal or non-existent income and outstanding amounts of debt in student loans, many people may never fully rebound from their debt.
Unlike credit card debt, filing bankruptcy cannot wash student loans and the government may seize one’s income to recover the money owed.
In a 2009 airing of The Suze Orman Show, American financial advisor Suze Orman says that in this economy, a minimal debt can turn into a significant debt. With people simply not having the money to pay for their debts, they stop paying all together making what was once a $50,000 loan now a $100,000 loan and so on.
“Now we have kids that owe so much money on their student loans that they will never be able to do anything but pay on their loans for the rest of their lives, if they can even do that,” Orman said.