Back To School Debt

The staggering unemployment figures have driven the US working class into a dizzying spin. According to data from the US Bureau of Labor, overall, US unemployment now stands at 9.1%. Rather than sit around, many unemployed Americans have headed back to school.

Of course, returning to school after a sabbatical from work does make a lot of sense. Learning a new skill may open up new income opportunities. Getting out of the house, meeting and networking with others also beats becoming lazy, crazy, or bored. In addition to the many other benefits of returning to school, getting access to educational federally backed loans that have no bearing on a now depressed FICO score or bankruptcy history, is a 'hush hush' benefit that cannot be denied.

It certainly seems more honorable to go back to school than to sit on the sofa and create a permanent imprint of your ever-expanding rear. However, no matter how honorable, justifiable, and entertaining - going back to school also adds to the heaviest burden of unemployment - new DEBT!

When you consider that the average college tuition cost has increased by 900% since 1978 in the USA, and that the average student racks up about $25K in debt by graduation, plus the fact that within 3 years, 14% default on their student loan; student debt is on the horizon to becoming the next national financial headache.

With a bit of research and time, adult students may find there are scholarships or grants they qualify for. However, many anxious to get their hands on credit history ignored loans, may not do due diligence in this area. Ignorance of the process, overwhelmed and under staffed financial aid help, and a lack of creative thinking may limit scholarship and grant access. Who knew being taller than 6' 2" qualified a person for a scholarship? Would you even think to check? How about applying for a $3000 scholarship because you created a prom dress out of duct tape? Well, there is an app (scholarship application) for that too.

State colleges will always be more affordable than out-of-state options, and technical schools are usually shorter in duration and more affordable than local 4-year universities.

On campus employment, work from home opportunities as a flex-time side income, taking the maximum study load during a semester to complete the program faster, and bagging lunch are some of the other ways to reduce the cost of the back to school experience.

Using educational loan funds for anything other than education; for example: to pay for cable, weekend entertainment, and to enjoy other quality of life experiences - is debt adding behavior. Generally, debt free wealth will never be achieved if the debt adding process continues. Educational debt, no matter how arguably justified, is still a debt. Avoiding the debt through accessing educational plans, scholarships and grants, or at least minimizing the expenses it is the best way to return to school while still working to have debt free wealth.

Debt Free Wealth Building, Corp. is a non-profit money education organization on a CRUSADE to educate, empower, and encourage those who desire it, to achieve debt free wealth. Students can find guidance here to avoid or minimize the pitfalls of taking on debt to facilitate new education.

Trudy Beerman is a Crusader for Debt Free Wealth. She has many credentials in the financial services industry - but as a Paralegal, bankruptcies and estate planning surfaced to the front of financial relevance in terms of knowledge to protect family legacies.

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5 Tips for Minimizing School Loan Debt

Attending a college or university is often an expensive venture due to the high cost of tuition, books, dorms, food and other added fees. The problem with the high expense is that many students end up taking out large student loans to pay for all of the costs. After getting out of college, the debt lingers and is often challenging to pay off completely. Fortunately, it is possible to minimize your school loan debts.

Scholarships and Grants:

Scholarships and grants should always be one of the first steps to paying for your college expenses. Since scholarships and grants are free money that you can use for your degree, you will never need to pay it back. Scholarships and grants are available through the school, from private companies and from private organizations. They have specific requirements, such as a specific field of study or a specific GPA, but if you receive the money it will save on the amount of debt you take out.

Savings:

Open a college savings account early and put aside some money specifically for college. Starting as early as possible is ideal, but even if you start in high school you can have enough money put aside to pay for part of you college expense without touching debts. A 529 savings account is a perfect opportunity to lower your taxes and save up extra money while also investing that money. By adding an element of investing to the savings, you'll end up with more money for college available. If you decide to use a 529 college savings account, you will need to declare it on your FAFSA application.

Work During College:

Working part-time while you attend college can help you manage expenses while you are going to school. While it might not provide enough money to pay for everything, it will help you pay for some of the expenses like books and part of tuition.

Limit Student Loans:

Take out only the amount you need after exhausting all other sources of money to pay for the college. This will minimize the amount of money you take out in loans by preventing you from taking out extra money. Keep the amount of student loans you take out to the lowest possible amount rather than the maximum.

Make Loan Payments:

While you attend college, you are allowed to make loan payments on whatever student loans you've taken out. By paying as much as you can before getting out of college, by the time your degree is complete you will have paid back enough of the loan to have a much smaller debt.

Conclusion:

Limiting your student loan debt is simple. You just need to avoid taking out more than you absolutely need to pay for college and use other options at the same time.

Joann Carlisle is a writer who looks forward to sharing her knowledge and advice with readers. For more on school loan debt, Reduce Debt Faster offers readers advice for how to consolidate student loan debt.

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