The following question and answer comes from my book Success for Life: Answers to the 77 Questions College Students Ask. I received over 1000 questions from students looking for answers, wondering about the best path in life. If you like what you read here, you can pick up your copy AT AN ALL-NEW LOW PRICE to read all of this helpful advice.
I’m opposed to going into debt, so should I get a loan for college?
This is a great question. As a country, we are in a crisis of mounting consumer debt. In 2006, there were 984 million bank-issued Visa or MasterCard credit cards in the US; remember, there are only about 300 million Americans, so over 3 cards per person. Total consumer debt was $2.46 Trillion and $904 Billion of that was revolving debt. Almost 10% of people with credit card debt have over $9000 owed to cards; if you add in all debt except house mortgages, almost 37% owe more than $10,000.
Debt is a killer as we will discuss below (avoid credit card debt like the plague). Yet, in some instances, for most Americans, there simply is no other way to proceed. Buying a house and a car have long been considered “normal” circumstances in which people accept long-term debt. With rising inflation, this is even truer today. In particular with a house, the reason someone can accept heavy long-term debt is because the house is a solid investment. Education clearly is also a solid investment. Statistics show that people with higher education typically get higher paying jobs throughout their career.
While I have for years counseled people to avoid student loans if at all possible, increasingly today loans (which the government still calls “aid”—don’t ask me why nor get me started with that!!) are almost the only way to proceed. Yet, you must go wisely. First, find out all the information you can about the right types of loans/aid to get; consult experts or go to websites like www.students.gov or studentaid.ed.gov.
Second, always apply for Financial Aid no matter what your parents’ or your income are since there are many variables about your eligibility. Who knows, you might actually qualify for a grant (real aid), but you won’t know if you never apply. Realize that government loans are typically better than a bank loan, but don’t completely write off bank loans either.
You are wise to be scared of loans. Students are now leaving college with an average of $21,000, with some students in excess of $50 or even 100 thousand dollars in debt. You can be a wise person, however, in exactly how much debt you take on. Control your personal spending. Live on a budget. Consider a job to augment your college financial needs. If you are living on your own income to start with, then a loan might be the only way, but you can keep the loaned amount to a minimum. Be a stickler for details and at the end of 4-5 years, you will find yourself with a manageable amount to repay.
Addendum from 2015: As my faithful readers know, this year I sent my two oldest daughters off to private college. The eldest, Logan, finished her two years in my community college, and so is going as a Junior. My middle daughter Meryn had a stronger desire for the more typical “four year education” at her school, but still went with 18 credits from my College. For both, then, they already shortened and lowered the amount needed to complete. However, for both, they still ended up with some loans (for now) that are the ones from the government. So, as I sit here in 2015, almost a decade after I wrote the above information, I want to avoid being or sounding like a hypocrite….it currently is now almost impossible to avoid all student loans. You are making an investment. AT THE SAME TIME, be wary. Be devoted to doing all you can such as work-study and summer jobs to contribute to your own expenses. And make your final decision about college location based on cost. For both of my girls, they were accepted into more than one school, and a key factor in their final decision (besides prayer and God’s leading) was which option was most economical. Both girls ended up choosing the least-cost option, though perhaps they might have been somewhat wishing to consider another school. They are both at great Liberal Arts Colleges which will do much to propel their lives forward. But it is coming with a cost, both their own hard work while at the school and my own decision years ago to live well within our means so that we could save for this type of expense. If your parents cannot help and you are on your own, you can still mitigate costs by doing like my daughters and taking most or all of your general education courses at a local community college.