Student Loan Debt: A Broken System & How to Avoid It

Last week, the Wall Street Journal published an article about the history of the U.S. student debt crisis. You can read the article here, and it’s definitely worth the read. How did so many in this country get so deeply mired in student loan debt? And what can we do now to get ourselves, as a nation, out of this $1.5 TRILLION (with a “t”) mess?

Unfortunately, there isn’t an easy way out. Many of the people who took out student loans never finished college with a degree. Many others did, but the field their degree is in does not pay well enough to allow them to get out from under the student loans. Add in credit cards and a car payment, and it’s easy to see why so many people just see debt as something that will always be there for them.

If you’ve already acquired student loans, and are somewhere in the process of paying them off, there’s little else you can do other than to roll up your sleeves, sharpen your budget, and throw every extra dollar you can at your debts in order to get them paid off. Sure, there are those who are banking on the Public Service Loan Forgiveness program to forgive their debts after a specified period of time, but do you know the statistics on this decade-old program? Read this article from NPR and feel the frustration that oozes from this government program – of the 29,000 applications that were submitted after the original ten year period, ninety-nine percent were denied forgiveness.

If you’re still paying off those student loans, get on my schedule today to see how I can help you put together a plan to get those paid off – you would be surprised at how quickly it might be possible, with the right plan. And if you have kids nearing college age, and nothing in savings to fund their college education? A few tips to save money and avoid student loans:

1. Apply for scholarships and grants should be a high school students part-time job. Head over to a website like, a massive scholarship database, and have your student apply like it’s his/her job (because it is). A few hours’s worth of search and application each week could be worth thousands of dollars worth of savings on college – there are literally dozens of scholarships that never are awarded each year, simply because they are never applied for!

2. Consider community college to start. Knocking out general education requirements at a local community college can save you thousands of dollars, and the credits are almost always transferable to the larger state schools to continue on with the 4-year degree. I know I was undecided on my major during my freshman year; why not let your student figure out what he/she really wants to do at a less expensive school?

3. In-state versus out-of-state/private tuition. If your student wants to go out of state or attend a private school, this could mean 3-4x the amount of tuition of an in-state school. If you don’t have the funds, and you are paying for their tuition, require that they stay in-state. They might hate you for it now, but will be thanking you later, when they’re not saddled with six figures of student loan debt. Just because your kid turns 18 doesn’t mean you stop parenting them…especially if you’re the one footing the bill!

4. Work. Having a part-time job during the school year won’t kill your student; in fact, studies show that students that work part-time in addition to attending college full-time are more productive and earn higher grades than those who do not work. Could this possibly have something to do with learning good time management?!? If the student is required to be responsible for part of their tuition bill, I am a firm believer that they will be more dedicated to earning their degree not only as quickly as possible, but also with as high grades as possible, and I truly believe it’s because they’re financially vested It makes a difference.

Hopefully these suggestions are a help to you, as you navigate the murky waters of paying off student loans as well as the prospect of sending kids off to college in the near future. If you’re struggling in this area, schedule a session with me today, so I can help you with a plan to get ahead.

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