Monday, August 12, 2013
Beating the College Debt Crunch
With scary headlines about staggering college debt (National College Student Debt Now Tops $1 Trillion!), students rightfully wonder whether the cost of another semester with Plato or Poe or probability theory is worth it. Yes! A college degree remains essential to achieve lifelong economic security. College graduates earn on average about $1 million more than high school graduates over their working lifetimes. So, on their way to fulfilling their college dreams, how can students avoid the horror stories of crushing student debt?
When it comes to choosing a college, students have many options. Making the right choice requires the student to do homework, researching not only the obvious factors like academic programs and quality of campus life, but also tuition prices, total costs and financial aid packages.
One of the great strengths of U.S. higher education is the remarkable diversity of institutions – large and small, public and private, Catholic and other religious, women’s colleges and historically black colleges. Such diversity also extends to tuition prices – for every $50,000-a-year elite university, there are dozens of excellent colleges that may cost as little as half or less than a big name school.
Surprisingly, some of the most affordable colleges turn out to be private institutions, including Catholic colleges and universities that keep tuition prices low while offering generous financial aid packages. For example, at my university, Trinity in Washington, a historic Catholic women’s college now serving a distinctively low income population of students from D.C. and the surrounding region, our full-time tuition of $20,970 is much less than that of other private universities in the region. With Trinity scholarships and other grants, a typical student might have a final bill of $4,000 or less before considering loans.
Like most college students in America, Trinity students take out federal student loans. Congress just passed legislation to keep the interest rate low this year, although the law allows the future rate to rise with market rates. The average student debt for federal loans today is
$26,000, about the cost of a new car, but with a ten-year payment plan.
Colleges also have a serious obligation to control costs and to be completely transparent about financial aid, including making the long-term implications of taking on a loan clear to student borrowers. But the bottom line is simply this: students can control how much debt they will assume by choosing colleges they can actually afford to attend. The key steps to making the right choice include:
· Find out the total cost of attendance which is not only tuition, but also room and board, books and transportation, and incidentals to attend this college;
· Fill out the federal FAFSA (Free Application for Federal Student Aid) form as soon as possible to get the prospective colleges to develop your financial aid package;
· Compare costs and financial aid packages across several institutions;
· If loans are necessary find out up front what the total debt will be and how much the monthly payments will be after graduation;
· Make a realistic choice about which college has the best value – the combination of excellent educational results and affordability – and do not be dazzled by the nice things that are extraneous to a great learning experience (e.g., extravagant recreational facilities, famous football teams, elaborate residence halls) that tack on costs without necessarily adding significant value to your college outcomes.
Choosing a college is one of life’s most exciting and expensive propositions – right up there with buying a house. Taking the time to shop around, comparing prices and negotiating the ultimate bottom line costs will help students to reap great benefits from the college experience while reaching graduation day without crushing debt.
Patricia McGuire is president of Trinity Washington University.