January 18, 2018

Avoiding Debt… Before and After Graduation

Starting college is an amazing time of firsts; first roommate, first serious relationship as well as that first big step toward living on your own.  It should also be the first time students take a hand in planning their life financially for the future.  Financial decisions you make in college can have a long term effect on your overall financial health, which is why its important to start thinking early about your finances.  Here are some tips to help you get through college without taking on too much debt.

Avoiding Debt Before and After Graduation - photo copyright Rick Sherrell

  • Save Now – For high school students and parents reading this put every dollar you can aside now.  It’s very tempting for students to spend everything as it comes in, but having the extra cash for college will pay off more than a pair of new Jordans or a cute top will now.  For parents, being able to pay cash for a semesters worth of classes is much more important than a brand new car for finishing high school.  While your son or daughter may not be happy with a used Hyundai instead of a new BMW, they will thank you when all their friends are stuck paying student loans, and your child is not.
  • Find work at school – Once enrolled, students should concentrate on their studies; no argument, it’s their first priority.  Many schools though have paying internships and other positions that require only part-time work and pay fairly decent wages.  Some universities and colleges also offer jobs that exchange work for free or reduced class hours in the next semester.  These positions not only provide financial assistance, but also help to fill an otherwise short resume when it comes time to finding a job post-graduation.
  • Have a social life, but let the school pay for it – Even at local community colleges, there are events planned for every weekend and various clubs and activities throughout the week.  Most of these are going to be free or charge only a small fee (that usually comes with a t-shirt Mom will wash).  These events are normally on-campus with school staff running the show.  They provide a way for new students to mix with upperclassmen and get an idea of what they’re going to experience over the next two or more years.
  • Eat at the Dining Hall and Student Unions – For a flat fee every semester, students can get three meals and (depending on the school) a snack every day.  Since healthy students perform better in the classroom, many Colleges and Universities are hiring professional chefs and Cordon Bleu graduates to handle their Student Dining Programs; gone are the days of Tuesday Mystery Meatloaf.  For the student who uses that meal card correctly, it’s a golden ticket that can save hundreds of dollars every semester.  In addition to the cost savings, most schools limit the types of cooking and food preparation they allow students in their dorm rooms.  Taking meals with their fellow students provides better nutrition and another way to socialize outside the classroom.

Post Graduation Options

Once a student has graduated, the future is bright, but he or she (and their parents) need to be ready to face the reality of a job market that is still weak.  The largest numbers of new hires today are for part-time positions.  Employers are putting people to work at less than 30 hours and even less than 25 in many cases.  These jobs do not have health benefits, so new graduates may find themselves living at home again and possibly still on their parent’s insurance to handle any health concerns that may come up.  Add to that the financial burden of student loans which arrives six months after leaving school; these new graduates have a huge weight on their shoulders.  Fortunately, there are a number of programs available from the Department of Education designed to provide relief.

Income Based Repayment Plan

Income Based Repayment is an excellent way for graduates to stay ahead of their loans and keep their credit rating intact while trying to build their career.  Those who qualify will have a monthly repayment amount that will never exceed fifteen percent of their adjusted gross income (money remaining after rent and utilities) above the poverty line.  In some cases, graduates may even qualify for a zero monthly repayment.  This amount is recalculated every year to reflect a promotion, being laid or even the birth of a child.  This also prevents you from falling into default on your loans if you cannot make a payment.

Public Service Loan Forgiveness

The Public Service Loan Forgiveness program is ideal for those graduates who followed their heart and conscience into a career with a non-profit organization or government agency that provides services to groups such as the elderly or the disabled.  It’s available to those students who have loans under the Direct Loan Program.

Teacher Loan Forgiveness

The Teacher Loan Forgiveness Program helps those who have dedicated their working lives to students; often at the expense of their personal lives and financial future.  This program in particular helps those teachers who have spent many of their years teaching at lower income schools with at risk students or at schools on Native American Reservations or run by Tribal agencies under the approval of the Department of Education.

The best way to secure a better future is still with a college degree.  Students and parents need to be aware of the cost involved and what they can expect after graduation.  This should temper their expectations and get everyone ready for what should be an amazing life.

This is a guest post from Demetrios Sourmaidis.  Graduate of the University of Connecticut with a degree in Finance, he is currently a writer for www.StudentDebtRelief.us whose primary objective is to educate and assist student loan borrowers on the many federal programs available to them, including loan forgiveness.

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