Student loan debt has become a way of life for many Americans. Three-thousand dollars’ worth of student debt is accumulated with each passing second, adding to an already astounding total of $1.2 trillion owed nationwide.
When your 18-year-old son or daughter is preparing to leave the nest, odds are that student loans and the resulting debt is the last thing on their mind. However, it’s imperative that your stress the importance of how much money is going into their college education. While a college degree is still a good investment for their future, there are some things they should know before taking on an overwhelming amount of student loan debt.
The Growing Cost of a College Education
It’s no secret that the cost of a college education is on the rise, but just how much is it growing? Over the past three decades, college tuition rates have increased much faster than inflation and incomes. Since 1980, tuition costs at colleges in the U.S. have risen by an absurd 757 percent. In comparison, food and electricity costs have risen about 150 percent and gasoline has risen 400 percent over the same time period.
According to College Board, college tuition rates have climbed an average of six percent annually over the past five years. If the trend were to continue, students could soon be facing a stunning $145,000 price tag for a four-year public university education, and a whopping $350,000 for four years of private education by 2023.
Is it Worth It?
While the rising costs are a huge cause for concern, many financial and educational experts still suggest that a college education is worth the investment. The key for students is to remain committed and focused on getting the highest return on their college investment.
According to the Bureau of Labor Statistics, college graduates have a significant increase in earning potential by the time they reach 25 years of age. Additionally, unemployment rates for graduates of either a two-year or a four-year program fall below national average.
One of the quickest ways to watch your son or daughter’s student loans skyrocket is by prolonging the time it takes them to complete their education. Going into a college education without a clue of what you want to do can be costly, as those wasted years in between majors can quickly add up. If your child doesn’t have a clue of what to do, perhaps a year off or some time spent at a low-cost community college is the answer.
Well before enrolling and signing up for loans, encourage your child to consider some factors that will affect the cost of their college education, including:
• In-State vs. Out-of-State Tuition Costs
• Tuition Differences Between Public and Private Universities
• Staying Close to Home vs. Attending a College Far Away
Other Ways Around the Cost
Even as tuition grows, there are ways to get away some of the costs of a college education.
One of the best resources for your son or daughter is the free money made available through grants and scholarships. According to a recent study by NerdScholar, nearly $3 billion in free federal grant money went unused during the last academic year due to students not applying for FAFSA. Even if they think they are ineligible, encourage your son or daughter to take the time to fill out a FAFSA form and they may be surprised at their return.
Scholarships are also a great way to get some free money for college, and the internet has made finding scholarships for any school, discipline or affiliation easier than ever before with sites like Fastweb, Chegg and Cappex.
If your child chooses to go to school a bit closer to home, living at home rather than on-campus can help limit the overall cost of attending college. Even if they attend college far away, encourage your son or daughter to explore their options with off-campus housing.
Not every student will be able to escape their college education debt free. Federal and private loans are available to help students manage any remaining cost associated with their education. Seek out any federal loans first, and use private loans as a last alternative.
Getting out of college debt free starts months before a student steps foot on campus. Provide your child with the tools and knowledge they need to better manage their money during their college years with help from CHROME Federal Credit Union. Our financial products and services are simple and easy to use, providing your son or daughter with all the means necessary to manage their personal finances and control the cost of their education. Whether you’re looking for a loan or a better banking solution, contact CHROME today for all of your college financing needs.