College costs continue to rise, despite the recession and economic struggles of many American families these days. Public college tuition costs students about $7,000 per year and private colleges cost more than three times that much. With rising costs and many families struggling just to get by, many college aged students are wondering if its worth it to go into debt for a college education, or if they should look at other options. Here are some facts to consider as you make a decision on what kind of schooling to obtain and how to pay for it.
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Financing is Available
When looking into financial aid, most schools will advise you to first seek for grants and scholarships, then go for federally backed loans, and lastly, consider private loans if necessary. Federally backed loans have advantages such as fixed low interest rates, better terms, subsidized rates for students who qualify, and having loan payments postponed as long as you continue attending school.
Options for Student Financial Aid Include:
School Loans – College loans work just like other types of loans, where you are given money at a certain interest rate, and you make payments over time to repay the loan. You can receive a student loan from the government, from your University, or from a private bank or credit union.
Scholarships – This is money to pay for your school costs that you don’t have to pay back. You can receive scholarships based on grades from your school, or you may qualify for specialty scholarships based on talent or special group status from a private entity.
Federal Grants – This is a financial reward given by the government for student school expenses. Grants are available depending on certain financial circumstances and other criteria.
529 Savings Plan – These special savings plans are usually set up by a student’s parents for children under 18, and provide a tax free way to save for college expenses. Money is deposited into the fund over time, and the accumulated cash can be used for college when the time comes.
Trends in College Financing
One study concluded that not enough parents and students focus on the total cost of college and very few are using available college savings options. Too many students borrow without thinking about how they will repay the loans, and many are not completing financial aid forms to receive government assistance with tuition costs.
Most Students Graduate With Loads of Debt
According to the American Council on Education, the average student who graduates with a Bachelor’s degree will have accumulated debt of $26K – $29K. Graduate students accrue even more to finish their advanced schooling. Medical students have the highest debt, graduating with $100K+ in debt by the time they complete their schooling. Law students are only slightly behind the medical students, graduating with an average of $80K – $100K in debt.
Is College Worth the Debt?
A College Board study reported that Bachelor’s degree recipients earn 60% more than those without a degree. Over one’s lifetime, the salary gap between a Bachelor’s Degree and a High School Diploma add up to over $800,000. Job satisfaction is likely higher among those who earned a degree to get into their desired field. So answer the question for yourself – is college worth the debt? The numbers speak for themselves.