We are approaching May 1–the final decision deadline for college. Part of that decision is making wise financial choices. Do you or your student want to graduate with student loan debt?
Last year, there was a story in the news about a student who opted to attend Columbia University entirely on student loans. Her family did not meet the requirements for government grants, but her single mom could not afford to contribute any money toward her college education. What happened? She graduated with over $100,000 in student loan debt and could not find a job. Her expensive college degree was not worth the investment.
What went wrong? Why did this student decide to take out so many student loans to attend college? There were three breakdowns that contributed to this decision and resulted in the massive student loan debt:
Her mother wanted the best for her daughter; so much so that she couldn’t advise against attending her dream college. It’s the parent’s responsibility to explain the consequences of graduating with debt and helping the student to understand the negative outcome. It was tough love time and “love” won out.
The college financial aid office didn’t explain repayment options, defaulting on student loans. All they did was have her sign on the dotted line and collect their money.
The student didn’t educate herself about student loan debt. Before taking out government and private loans, she should have checked the repayment calculators and be honest about her ability to repay. Most students have no idea how much student loan debt they have until they graduate.
I recently watched a video by LendEDU interviewing students about their student loan debt. It was eye opening. Every student and parent should watch it.
Choosing another college based on financial aid is a wise decision. Although this was her dream college, she now regrets taking out all those student loans. This could have been avoided if all three of them did not drop the ball. Be realistic about student loan debt.
Check out my guide for parents: Parents Crash Course