Tips for Avoiding Student Debt

Mar 30, 2012 by Tom Dellner

New Reports Deliver More Sobering News on Nationwide Higher-Education Debt Crisis

The dire news about America’s student debt crisis just keeps on coming, seemingly on a weekly basis. Here’s a small sampling of a few of the alarming nuggets appearing in a collection of recently issued reports:

  • According to the Consumer Finance Protection Bureau, total student loan debt in the U.S. now exceeds $1 trillion—not surprisingly, a record high. Students took out $117 billion in federal student loans last year alone;
  • The interest rate on Stafford Loans is set to double to 6.8 percent on July 1, 2012 if Congress doesn’t act;
  • If the interest rates do, in fact, double, students who borrow the maximum $23,000 will be forced to pay $5,000 more to service that debt under the 10-year plan. That figure jumps to an $11,000 increase under the 20-year plan, says the U.S. Public Interest Research Group; and
  • According to a survey conducted by the not-for-profit Young Invincibles, undergraduate and graduate students who had recently taken out student loans did not understand the terms and conditions of the loans. Two-thirds did not understand the difference between private and federal loans options and another two-thirds were surprised by their repayment terms, their monthly payments, or their interest rates.

Since no one is expecting tuition rates and/or salaries to take dramatic turns in favorable directions, here are a few strategies for avoiding, minimizing, or successfully managing student debt:

  • Shop for grants and scholarships. Don’t assume that these are impossible to obtain or exclusively reserved for certain demographics. There are more grant sources available for the average college student than you might expect;
  • If you must borrow, try to stick to government-sponsored Stafford loans rather than typically more expensive private loans (which may come with a variable interest rate);
  • Live frugally and don’t borrow more than you have to. This may seem obvious or simplistic, but many succumb to the siren song of seemingly easy money and use student loan money to pay for living costs or even entertainment expenses. A good rule of thumb is to avoid borrowing more than you can reasonably expect to make in your first year of employment upon graduating;
  • Read and understand your loan’s terms. Run the numbers to determine how much it’s going to cost to repay the loan. The Student Loan Advisor tool at can help you determine the monthly repayment figure and will even suggest a maximum manageable debt amount based on a projected salary.

Our strongest suggestion is to “shop smart” when deciding whether and where to go to school. You shop around and carefully consider value when making other important purchasing decisions; don’t abandon these strategies when exploring your higher education options. There is value in higher education if you do your research and keep an open mind.

Of course, we hope you’ll consider CalSouthern when you’re making your decision. We were founded upon the notion of making higher education of exceptional quality affordable and convenient for non-traditional students. That’s why we offer reasonable tuition that will never increase as long as you remain a student, along with interest-free payment options that make it possible to graduate with little or no debt.

Again, value does exist in higher education.

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