Student Loans – Don’t Borrow Trouble

[DJ Minteer]

Avoid student loans at all cost!

We know how expensive it is to go to college, especially if you have a family and other financial obligations. But that’s still no excuse to go overboard with student loans. Here’s what we think about plunging into debt with student loans.

Don’t pick an expensive school if you have to borrow money. If you HAVE to borrow money for college, then pick the most financially affording school. The truth is, with few exceptions the school you attend will have little impact on what you learn, the job you get or how much you will make when you graduate. Don’t fool yourself into thinking it’s all about the school. It’s not. It’s all about what you get out of it and your personal motivation. Employers won’t care as much about the school as they do your character and the fact that you have the degree.

Don’t borrow money for college just so you don’t have to work while you’re getting your degree. If you can’t do school with only minimal loans throughout (or better yet, none!), then you need to work more, sell a lot of your stuff, and/or put more of the family to work. You, the student, may have to work full-time and go to school. You are correct - that will be no fun (or worse). But neither is divorce and bankruptcy caused from an out of control debt problem that started with your student loan applications, augmented by easy credit cards while in school.

If you do borrow money you’ll be tempted to defer payments for awhile after you graduate from college. After all, you’ll be wanting other things – like to buy a house, some fancy new vehicles and other toys. Deferring your student loans is another big financial mistake though. Don’t do it. The interest will just keep on compounding and adding to the amount owed. Think about it – years of interest just added right on to the amount due. Can you really afford that? If you can’t afford to pay back your student loans right away (as in a year or two, maximum, after graduating) then you really can’t afford to get them in the first place.

In addition, most student loans will not go away in a bankruptcy. You’ll be stuck with those for life. Is the savings in interest rates really worth the added risk? If you simply must borrow money for school, then get it through some other means than traditional student loans. The interest rate may be higher but there is way less RISK to your financial future.

If you do have student loans - pay them off as soon as possible. Don't keep them until you're a grandparent!

So, to recap: DO pick an affordable school, do work while you go to school and “pay as you go” no matter if it takes a few years longer, and if you get loans for school do pay them back within a year or two maximum after graduating.

DON’T pick a fancy school just because it would be “cool” to go there or for some other snob factor, don’t be a student only – work too, if you get loans don’t get “student loans” but some other type of loan, and if you get loans don’t defer loan payments after you graduate.