By now, we probably all know someone who struggles with student loan debt or job woes. Many of us young folk went to college hoping to make our dreams come true, only to find ourselves saddled with enormous debt and no job prospects. Young grads are still having trouble nailing down that first professional job, and many people aren’t working in the industries they trained for. It wasn’t exactly a walk in the park for older people either, whose careers went kaput and they had to go back to school or get new training. Stories from the Great Recession are many among us.
(Photo Credit: Quickmeme)
Education is as important as ever. This is why you shouldn’t just choose a college, but choose a college based on data to help you make a sensible financial decision. There are so many free and data-driven tools to help you now — such as PayScale’s College ROI and College Salary reports.
Attending college will probably be the first big financial decision that young people make, and sadly, there are many ways to screw it up. You should know what you’re getting yourself into. With tuition so high, making a poor decision can affect you for a very long time past college. And you don’t want to live a life grumbling about what could’ve been, swimming in debt. So, in the spirit of my and my fellow millennials’ overpriced art degrees, here are a few tips to help you do it right:
1. Apply to more than one college
You know there are like, thousands of schools out there, right? Applying to multiple colleges might seem daunting, and it may very well be expensive, but take your time to do the research and explore your options. Don’t pigeonhole yourself into one place, one school, or one program. Visit the campus if you can. You might think you know exactly what you want, but you don’t. You’re young, it’s OK to change your mind. You want to have the flexibility to keep going if you love it, or leave if it just isn’t working out. On that note, make sure the school offers transferable credits!
2. Get your parents involved
Parents may not be able to be super-involved in a child’s college choice, but they should at least sit down and have a frank conversation with their child about money. Because, the federal government’s approach to college isn’t about you, the individual; it’s all about keepin’ it in the family. Regardless of whether or not your parents are helping you pay for college, the federal student loan system operates on the family’s ability to pay until the child is 24. Thus, when you fill out your FAFSA, the government determines whether you are eligible for aid based on the income of your parents.
There is little wiggle room for students in regard to this rule, unless you are emancipated, married, or have children of your own. This is as important for students to know as parents, as whether or not parents are helping with tuition costs determines if students will have to take out loans, and whether the government will be subsidizing the interest on those loans.
3. Ask the hard questions
Rather than asking yourself, “Where do I want to go to school?”, you should ask “What does this school offer me?” and think about the long term. Some good questions include:
- What is the graduation rate?
- How many years does it typically take students to graduate?
- How many students transfer out of your school (and why)?
- What percentage of students receive financial aid at the college?
- What is the average student loan debt that students leave with?
- What is the student loan default rate for students from your school?
- Does the school have a job placement program and how long can you take advantage of it?
- Are students getting jobs in their industry after graduation?
These are some of the important ones, because again, these are the long-term questions. You are essentially finding out if the college legitimately prepares its students for reality, or just kicks them in the bum on the way out.
4. Don’t ever let anyone tell you what you your major/degree is useless
If I had a nickel for every time I’ve been told (or it was implied that) my silly art degree was useless and therefore, by proxy, I am useless and deserve a life stuck in low-paying service jobs … I’d be rich! Back in the day, when fewer high school graduates went on to college, you could get a degree in pretty much anything and still have a good chance of getting a decent job.
Clearly, the times have changed. A degree is no longer a guarantee of a better life, and your choice of major should be a point of scrutiny. That doesn’t mean that any degree won’t improve your odds though, as college graduates still make better lifetime earnings than those with only a high school degree. The truth is, not all majors are created equal. Yes, STEM majors have more and higher-paying job opportunities, but that doesn’t mean there aren’t any real world applications for liberal arts majors. (That also doesn’t mean that people who study art, music or poetry are studying it solely for the lavish career opportunities.) Ultimately, only you can make the best of it with the combination of your education, skills, and talents. Be creative!
5. Loans, loans, and more loans
Depending on tuition and fees, you may have to take out loans to cover the full cost of school. It’s been said over and over: few 18-year-olds have the financial literacy to understand student loans in the long term. It still remains far too easy to sign on a dotted line and receive a disbursement of tens of thousands of dollars, while having no conceivable way of paying it back later. Often times, students don’t have the financial history to do this alone, so they will need a co-signer (another reason for parents to pay attention!).
Student loans come due six months after you graduate. Then comes all the fun of figuring out your loan repayment terms — how much you owe, at what interest rates, and whether to consolidate. Hopefully you only had to take out federal loans, which have more flexible payback terms (such as income-based, deferring and forbearing payments during economic hardships, and longer overall payback terms). Private loans aren’t so forgiving, and most do not have to comply with the payback options that federal loans offer. And let us not forget: Student loans can’t be discharged in a bankruptcy! (Read here about all the fun things that can happen if you default on your loans.)
The Obama Administration has introduced new guidelines to judge and weed out poor-performing, high-debt colleges from receiving federal aid, which is a step in the right direction. But with students now graduating with an average of $30,000 student loan debt, you need to be more careful than ever about loans. Schools will jump through hoops to get you the money to attend — whether you should take out those loans is a whole new question entirely.
If all this is making your head spin — it should! But there is no reason why you shouldn’t go in armed with good information. Your future depends on it.
Tell Us What You Think
How did you choose your college? We want to hear from you! Leave a comment or join the discussion on Twitter.
Your comment about applying for more than one college, is a great piece of advice. I applied to three different colleges last year, and was accepted to all of them. However, I had no idea that different schools offer different amounts of scholarships. I decided to go with the one that would accept my scholarships and give me more scholarship money. I plan on going to school locally, because that saves me time and money, but someday, I want to… Read more »
Hi, Melissa. I thought that student loans could be paid through bankruptcy? Perhaps I had a wrong idea in my mind. I just finished my undergraduate degree, and I’m starting my graduate program. I’m hoping that I’ll be able to pay off some of this debt, or else I might have to file for bankruptcy!
Alex Jennings | http://www.rebecklaw.com/services.html
Ms. Hurst, I enjoyed your article but must point out an inaccurate statement. Both private and Federal CAN be discharged in a bankruptcy. True that they are not automatically discharged in bankruptcy and there is a procedure that has to followed in an active bankruptcy for this to happen. Further, both private and Federal student loans can always be paid through a Chapter 13 bankruptcy. Please feel free to visit my website for more information, or email me if you… Read more »