Thursday, June 2, 2011

Congratulations Graduates! Now how are you paying for college? Read on…

By: Karen Alexander,
Community Financial Education Partnership Coordinator


Its graduation time and high school seniors have been anxiously waiting for it all year. Their lives will change dramatically if they are going off to college in the fall.  Here are a few things they need to think about before they go.

Your #1 Goal is to Graduate with as Little Debt as Possible: 
Today many college students graduate with significant student loans; as much as $200,000.  This debt is permanent and may take decades to pay off.  You need to understand student loans cannot be discharged by filing bankruptcy; the only way you can get rid of this debt is by paying it off. A great rule of thumb: Don’t borrow more than your anticipated starting salary after you graduate.

Not all Loans are Created Equal:
Grants, Scholarships and Federal Work Studies are great ways to pay for school, because you do not need to pay them back.  But if you need student loans in order to afford college, the best deals are federally subsidized loans.  There are also unsubsidized federal loans and private loans but these are more expensive.  To see what you qualify for, you’ll need to fill out a FREE FASA statement annually at http://www.fafsa.ed.gov/.   Do this even if you do not think you’ll be using loans – schools look at these when awarding scholarships too.  Be careful to only borrow the amount you need and you should avoid using credit cards to pay for school.

Consider going to a community college for 2 years first.  You can save as much as 98% over going to a state college.  If you decide to go to community college, contact the school you plan to transfer to and make sure your credits will transfer. You will avoid wasting money and re-taking classes at your next school.

Commute to School:
If you have the option to commute, you can save thousands on room and board.  It is expensive to live on campus; on average, you will save $9,800 a year. 

Work on Campus:
Working on campus will give you some additional spending money, and as long as you manage your time, you should be able to maintain high grades.

College is an exciting time in the life of all young adults.  Make the right choices so you’re not paying for it decades after you graduate!  Good Luck!

For further reading, please check out the following articles:





Posted by: Karen Alexander, Community Financial Education Partnership Coordinator.

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