How to Avoid Student Loan Debt

STEVE ROSEN Content Agency Tribune

My stance on President Joe Biden’s plan to wipe the slate clean for borrowers on billions of dollars in federal student loan debt: I don’t like it.

I understand why there are many arguments in favor of the White House plan. But, like many readers, I think it’s a slap in the face for those who graduated college in debt but made the payments like clockwork — even when it hurt — to forge a positive outcome. They kept their promise to return the money.

Now they are being told to cover the debt of over 20 million people who cannot. At least the president’s plan includes a new repayment program that would reduce student debt repayments in the future, with monthly payments capped at no more than 5% of a borrower’s discretionary income, compared to 10% in the existing income-based programs.

Borrowers who benefit from the president’s plan – assuming he survives the challenges – can hit the box on the road with Uncle Sam there to clean up the mess. It’s the American way, given the huge federal bailouts of years past to automakers, big banks and other corporations deemed too critical to fail. This time ordinary Americans get the straight break.

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But I also understand that there are millions of borrowers whose lives have been shattered because of loans – and all the interest that comes with them. Is there a better way than a bailout to help them?

Of all the statistics and data presented by supporters and critics, I have focused on this one: the level of federal student loan debt – currently $1.6 trillion – will return to today’s levels. within five years of cancellation without facing rising college costs, according to the Committee for a Responsible Federal Budget, a nonprofit that advocates for deficit reduction.

But I digress. Politics and politics aside, what can parents and students do now to avoid falling into the same debt trap?

Here are some ideas for making college more affordable that not only don’t require a presidential prescription, but require little effort — just a dose of common sense.

  • Scholarships. If there’s a high school student in your house, start looking now for scholarships, grants, and other forms of “free” money, which, unlike debt, don’t require repayment. Many nonprofits, businesses, and other private organizations have application deadlines before December 31. There are a number of websites that list a full range of scholarship programs.
  • University credits. Enroll in as many Advanced Placement courses as you can handle. Earning college credits in high school can shave thousands of dollars off the total tab.
  • Community colleges. Community college tuition is usually a fraction of public school tuition. In some states, students can even transfer credits to a four-year public school after two years. Make sure your home state offers credit transfers. Likewise, trade schools may be the way to go for those looking to develop a trade.
  • Schools without loans. More than 50 colleges offer loan-free financial aid programs that include scholarships, grants, and work-study opportunities. Most colleges offering this option tend to be smaller liberal arts institutions, such as Grinnell, Bates, and Amherst. Other no-loan schools include Princeton, Yale, Brown, University of North Carolina, and Virginia.
  • Just say no.” Ideally, look for colleges that meet your child’s academic needs without putting the family in debt. If your teen is considering colleges that will break the bank, just say “no.” Look for schools that will pay you to attend – there are plenty.
  • 529 shots. The most effective way to save for college is to start contributing to a 529 college savings plan, ideally while your child is still carrying sleeping bags and diapers.
  • The intelligence of money. Take a personal finance course in high school. Learn the basics, especially how to avoid accumulating debt of all kinds.

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