Tuesday, 02 October 2018 17:26

How college students can cut their debt

Student debt has been rising and the average undergraduate doesn’t feel confident they will pay off their loans before middle age.

Lots of factors contribute to the increased debt a student faces. Some of these include:

  • Higher tuition costs

  • Increased time requirements to obtain a degree (5 year program vs 4 year)

  • Fewer students work while taking classes

  • More competition after graduation

  • Higher cost of living precludes early repayment of loans

And it is projected to rise.  The Congressional Budget Office each year projects the total amount of new federal student loans the office believes they will issue with this year projected to be nearly $1.5 trillion.

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Andrew Coates, candidate for University Regent in Southern Nevada, states, “One way that colleges can help students keep their debt under control is by locking-in tuition rates.  This means that tuition will not be increased while a student pursues their degree.  By locking-in tuition, students will know exactly how much they will pay each year in college, which will help them budget accordingly.”

 

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ANDREW COATES, CANDIDATE FOR UNIVERSITY REGENT, SOUTHERN NEVADA

 

So how can students curb their debt?

Choose an affordable college

 

According to US News data, the average cost of tuition and fees for the 2018–2019 school year was $35,676 at private colleges, $9,716 for state residents at public colleges and $21,629 for out-of-state students at state school, with many universities easily exceeding these numbers.  So students may want to consider getting early credits completed at community colleges and then finishing their degree at a university.  Additionally, many will need to decide if its worth picking an out-of-state college for a degree that provides the same job market edge as an in-state school.

 

Research available loans, grants and scholarships

 

Many students don’t apply for grants, loans and scholarships because of time constraints, misconceptions such as they don’t fit a demographic, or  “will be credit history required?”, and lack of optimism that they will even qualify.

Mark Kantrowitz, publisher and vice president of saveforcollege.com states, “More than 2 million students did not get a Federal Pell Grant even though they were eligible because they did not file the FAFSA.”  FAFSA (link attached) is a free application for federal student aid assisting students who want to apply for a loan, grant or work study.

Scholarships are ideal in that they do not need to be paid back. Many can be found at scholarships.com.

Learn to budget

 

Many students get a culture shock living on their own when they spend as if Mom or Dad is still footing the bill.  If eating out nightly, shopping online, or using excess data does not fit into the amount your trying to live on each month, budget expenses early on and stick to it.

Avoid the credit card trap

 

When we try to build our credit as a young adult, we may apply for a credit card that advertises to college students with no monthly fee and “rewards.” However, the interest rates can be up to 25%.  If you do use the credit card don’t borrow more than you can pay  off each month, always shooting for a zero balance.

 

Keep your living costs down

 

Rent, transportation, utilities, meals, entertainment, internet and phone service, add up and can be more costly than tuition.  Share expenses with roommates or family members to lessen your loan debt.

Cook and prepare meals for the coming days, use school Wi-Fi, carpool to class, purchase less beer, and use the university gym to save money.

But most importantly, don’t stress about the debt.  Your efforts should be concentrated on your schooling and getting a degree is one of the best ways to combat your debt later in life.

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Daliah Wachs is a guest contributor to GCN news, her views and opinions, medical or otherwise, if expressed, are her own. Doctor Wachs is an MD,  FAAFP and a Board Certified Family Physician.  The Dr. Daliah Show , is nationally syndicated M-F from 11:00 am - 2:00 pm and Saturday from Noon-1:00 pm (all central times) at GCN.

 

Published in Money

If you think the American economy is booming now, just think what it would be like if American collegians had an extra $1.5 billion to spend—especially with President Donald Trump’s tariffs set to raise the prices of imported consumer goods despite he and his administration saying the tariffs won’t result in price hikes.

 

Well, if prices aren’t increasing, tariffs aren’t working. The point of a tariff is to make locally produced products more attractive to local consumers by raising the price of imported alternatives. This, in theory, would result in more local production and fewer imports. But a tariff is paid by the importer of a product, not the exporter. So the 25-percent tariff Trump recently leveled on Chinese imports is transferred to the American consumers of those goods, not the Chinese producers.

 

The trade war isn’t taking money out of the pockets of Chinese manufacturers; it’s taking money out of the pockets of American consumers of Chinese products and Chinese consumers of American products. And since the United States runs a $375 billion trade deficit with China, the only way Trump can “win” his trade war is if Chinese economists can’t do the math to match Trump’s tariffs dollar-for-dollar. It’s even becoming more likely trade with China ends altogether. China has already cancelled planned trade talks with Trump.

 

It is impossible for America to run a trade surplus with China because China produces more products Americans consider essential than America produces for the Chinese, including car, computer and mobile phone components. It’s lower labor costs and Americans’ addiction to consumption allow China to perpetually have the upper hand in a trade war. If an iPhone were made entirely in America, it would cost as much as a brand new car, so while Trump might be making some American-made products more attractive to American consumers, he’s doing so at the expense of American consumers who can’t do without many of the Chinese imports found in their technology and automobiles. Even the Tesla Model 3 can only be 95-percent American-made at most.

 

Since Americans will be paying more for computers, mobile devices and cars, it’s not entirely unreasonable to forgive the $1.5 billion in student loan debt and allow those accepted into college two years of college education free of charge. Students and parents are going to pay more for the devices required to attend college, and colleges are going to pay more for them as well, which will be reflected in tuition costs, which will further increase student loan debt while decreasing consumers’ available income for spending in the American economy, potentially sinking the stock market.

 

There are other reasons besides boosting the economy for the government to payoff student loan debt. First, today’s Associate’s degree, usually obtained in two years at a community college, is the equivalent of a 1980s high school diploma. Advances in technology have made working in what is now a global economy much more complicated and necessitates further education be obtained. Students are not leaving high school with the education necessary to provide for themselves let alone a family, and it’s not their fault.

 

Secondly, with 17 states offering tuition-free college programs, the trend seems to be students at least delaying the accumulation of student loan debt for two years, potentially lowering accrued interest as well as principal loan balances. In short, future college students in the United States will be saddled with considerably less student loan debt than current and past college students. Meanwhile, entire generations (and student loan debt does span generations), are suffering student loan debt and unable to stimulate the American economy by spending money on anything but debt and living expenses.

 

Finally, the collective credit rating of American college students, past, present and future, would receive a boost that could spur entrepreneurial growth and investment in businesses as a whole. America was the land of opportunity, where you could go from “rags to riches” with enough hard work. America used to be the best place to start a small business and be your own boss. That isn’t the case these days because despite incomes increasing for middle-class Americans, their purchasing power has barely budged since 1965. You can’t grow an economy in which most consumers have hardly more purchasing power than their grandparents did over 50 years ago, and consumer confidence in the stock market can’t increase if consumers have no means to express their confidence by purchasing stocks.

 

Lifting the $1.5 billion in student loan debt owed by 44.2 million American borrowers would allow 44.2 million Americans to spend their student loan payment, averaging $351 per month, stimulating the American economy instead of simply paying off interest. Lenders can’t be the only ones making money if the American economy is going to grow.

 

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Published in Opinion