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The Most Costly College Financing Mistakes: How To Avoid Them

Apr 21 2014, 4:29pm CDT | by

While I highly value a college education — I have two degrees — I despise the idea of college debt.  I graduated without this onerous burden, but few can do it today. That’s why there’s more than $1...

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14 weeks ago

The Most Costly College Financing Mistakes: How To Avoid Them

Apr 21 2014, 4:29pm CDT | by

While I highly value a college education — I have two degrees — I despise the idea of college debt.  I graduated without this onerous burden, but few can do it today. That’s why there’s more than $1 trillion in student debt outstanding.

There are ways to avoid the student debt trap. Some are straightforward, while others require some research. Here are my favorites:

* Avoid Private Loans. This is financing offered entirely by a private institution without federal loan guarantees.  Rates on private debt are much higher than the federal programs — up to 18%.  While only about 6% of all student debt is in this form, according to the College Board, avoid these loans at all costs.

“Private loans are one of the riskiest ways to finance a college education,” says Susie Bauer, a 529 manager for Baird’s Private Management Group, which just published a report entitled Statistics on Student Education Debt. “You would almost be better off using a credit card.”

* Using Loans to Cover Everything. There are a number of ways to finance college. The best way is to seek “merit” aid through grants, which don’t have to be paid back.

Colleges will also offer “tuition discounts” by lowering their “sticker” prices. Also consider work-study programs or living in off-campus housing. The principle here is to cover as much as possible without borrowing money. Look everywhere you can for “free money” for college.

“Make it your mission to uncover free money, understanding that it will take time and effort—but can significantly manage the burden of your student loans,” says Eric Adamowsky, co-founder of  Creditcardinsider.com.  “For example, there are many smaller scholarships and grants available through non-profit organizations, business groups, local chamber of commerce, city government, and state.”

You can also find thousands of scholarships by searching Finaid.

* Not Vetting a College By Cost and Return on Investment. There are lots of ways to see if a college is a good fit besides the look of a campus. Determining whether a degree make sense over time involves weighing many factors.

Let’s say you want to go to a highly selective college. Relative to the cost, what are the chances of making a decent salary after graduation? This is critical. A new college search engine called Noodle ranks colleges based on selectivity (odds of getting in), influence (reputation), education quality and outcomes (long-term earnings).

Sorting out a college’s “return on investment” is important once you work through the other variables of total cost, right fit and college ranking. A service like Payscale can help you on this front by providing earnings of graduates and evaluating a college relative to its cost. In any case, you’ll need to do some homework to avoid major debt.

John Wasik is the author of Keynes’s Way to Wealth and 13 other books. He writes and speaks about personal finance and investing.

8 Tips For Taking Out Student Loans

 
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7 weeks ago

RM47mil KWSG contributions still unclaimed

Jun 9 2014 7:54am CDT | Source: Business Times Malaysia

KUALA LUMPUR: About RM47 million of contributions in the Teachers Provident Fund (KWSG) still remain unclaimed, the Dewan Rakyat was tol ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
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7 weeks ago

Gold shop lost almost RM1mil

Jun 9 2014 3:50am CDT | Source: Business Times Malaysia

KANGAR: A gold shop owner lost almost RM1 million after after the safe on in his shop was broken ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
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7 weeks ago

Motion to debate MAS losses in Dewan Rakyat rejected

Jun 9 2014 3:39am CDT | Source: Business Times Malaysia

KUALA LUMPUR: AN emergency motion to debate the losses incurred by Malaysia Airlines last year, amounting to RM1.2 billion was rejected by the Dewan Rakyat today. ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
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7 weeks ago

MH370 Tragedy: Hisham: RM27.6 mil spent on 1st phase of SAR

Jun 9 2014 2:11am CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia spent some RM27.6 million in its first phase of the search operations for missing Malaysia Airline flight MH370, said Acting Transport Minister, Da ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
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7 weeks ago

9.1m litres of diesel seized in a month

Jun 8 2014 1:11am CDT | Source: Business Times Malaysia

PUTRAJAYA: The Domestic Trade, Cooperatives, and Consumerism ministry has seized some 9.1 million litres of diesel and property worth RM58 million since mounting ‘Operasi Diesel Selata ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
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7 weeks ago

Girl, 9, awarded RM2.78m compensation for medical negligence

Jun 6 2014 4:56am CDT | Source: Business Times Malaysia

KUALA LUMPUR: A nine-year-old girl who suffered brain damage during her birth at a government hospital was awarded over RM2.78 million i ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
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7 weeks ago

Malaysia's total trade in April up 12pc

Jun 5 2014 11:52pm CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia's total trade in April 2014 rose by 12 per cent from a year ago to RM123.86 billion due to growing trading activities, International Trade and Industry Mini ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
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7 weeks ago

Works Ministry to spend RM20m for upgrading works at 50 accident black spots

Jun 4 2014 11:35pm CDT | Source: Business Times Malaysia

JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year involving an allocation of RM20 million. ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
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7 weeks ago

Najib launches loan scheme for Ramadan traders

Jun 4 2014 10:24pm CDT | Source: Business Times Malaysia

PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramadan Bazaar Schem ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
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8 weeks ago

Residents bring up objection against Kidex to Suhakam

Jun 4 2014 4:49am CDT | Source: Business Times Malaysia

PETALING JAYA: A group of 20 Petaling Jaya residents held a meeting with the Human Rights Commission of Malaysia (Suhakam) over their objection against the proposed RM2.2 billion Kinrara Damansara Skywa ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 

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