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Avoiding the Student Loan Trap


By having a working budget and being financially aware, you should be able to avoid “the student loan trap”

 Dear Kim,

I am currently a junior in high school and I am hoping to go away to college after I graduate next year. I keep seeing all of the news stories about student loan debt and was wondering if you could give me some advice on how to avoid falling into the student loan trap.

Thanks,
Jennifer, CO

Dear Jennifer,

It is great to hear that you are looking to avoid student loan debt. The United States is currently experiencing a student debt crisis, so any steps to avoid unnecessary student debt are important. Most students do need to utilize student lending.  The vital element to avoiding too much debt is strategic planning prior to choosing a college and major.

Begin your college planning by meeting with your guidance counselor and by attending college fairs.  This will allow you to see what schools are best for your chosen major. You can also begin to get an idea of the cost involved for your preferred schools. I suggest that you do some research on your selected career. It is crucial to know how much your expected salary will be upon graduation.

I advise my clients to avoid graduating with more student loan debt than their anticipated salary the first year out of school. For example, if you choose to pursue a career as an elementary school teacher in Colorado, where you live, the average starting salary would be $33,000. You do not want to graduate college with more than $33,000 in student loan debt. The cost of the school and the financial aid package you receive should be a large factor in choosing your school.

You mentioned that you are currently in the 11th grade. Register to take the PSAT soon, if you haven’t already. Taking the PSAT is one of the criteria for the National Merit Scholarship. I suggest you begin doing research on scholarships. Begin your search around a strength you possess. Perhaps you are an excellent student or excel in sports. You may even find a scholarship for people that are left-handed! Apply for scholarships as soon as you can; free money is a great thing!

Please remember, the college you choose will be your home for the next 4 years. It will be what you make of it. If you are hoping to go to a very expensive school, check the cost of attending a local community college for 2 years and then transferring into the more expensive school. Make sure you review the financial aid packages you receive from your chosen schools; you may find that they are offering you great financial aid packages.

You and your parents should fill out the FAFSA and submit it before the deadline. The Free Application for Federal Student Aid is a government application for the federal education aid program.  This application will determine which federal student aid programs will be offered to you. In addition, the colleges may use the form to make a determination for grants and scholarships.

Lastly, please speak with one of our certified credit counselors to help you create a forecasted budget for college. There are many ancillary costs as well as miscellaneous items that can be expensive. Many students have relied on credit cards and private student loans to meet these unexpected costs. By having a working budget and being financially aware, you should be able to avoid “the student loan trap’.

Good Luck,

Kim

Do you need help with your student loan debt?  Call for a counseling session on 1-866-592-4557 or click for more information.

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Kim Cole is the Education Outreach Coordinator for Navicore Solutions. Kim provides financial education workshops and seminars to communities. Readers can submit general questions relating to personal finance, credit scoring, debt management, student loans, home finance or bankruptcy which may be highlighted in the next month’s edition. All identifying information will be kept anonymous.

Please send your questions via email to DearKim@navicoresolutions.org