How are we Going to Pay for College?

Higher education in America is no longer as simple as getting good grades, getting into a school fit for you, possibly taking advantage of a realistic sized loan or scholarship, graduating, and entering the workforce. Today in 2013, Millennials alike myself, a 4th year undergraduate student, have many more worries upon graduating than generations before us. 

As I approach graduation time, I can only hope that I have a job to repay my student loans. However, hundreds of thousands of Millennials will try to shove our way onto the workforce escalator. Traditionally, as senior level executives stepped off of the escalator each year, room was cleared at the bottom of the escalator for recent graduates to take entry level jobs. Everybody who was already on the escalator, climbed up a few steps to take more senior level positions. Our workforce escalator worked this way for many past generations. Currently, my Millennial peers and I are in enormous trouble with our student loans because the escalator has come to a halt. Senior level executives are returning to work thus pushing everybody beneath them down the escalator. Additionally, the trend of people waiting longer to retire, leaves even more people on the escalator - people who would have traditionally stepped off the escalator long ago. 

This unfortunately leaves me and thousands of my fellow Millennials dreary eyed and standing at the bottom of the escalator trying to use a microscope to find any space to get ourselves onto the escalator. 

The combination of delayed entry into the workforce for recent graduates and the rapid increase of the cost of higher education should panic everybody. As a result of that, I will be introducing a new series on behalf of Credit Advocates, dedicated to steering prospective and current students and their concerned guardians in the right direction on the topic of Student Loans. 


Get to Know Your Loans 

Before you take any action to alleviate your debt burden, you need to know what type of loans you have. Different loans have different payment plans, so knowing what type of loan you have is imperative. Look up your loan on http://www.nslds.ed.gov/nslds_SA/ . If your loan is on that website, it is a federal loan and NSLDS will tell you which type. If it is not on the website, it is a private loan. 

There are many less options for those with loans with private banks. Private lenders are not obligated to work with you to accommodate your financial situation. You should always try to contact your lender anyway. Everybodys situation varies greatly, however you should prioritize paying off private loans before federal ones - they typically carry a lower interest rate. You could even chose a payment plan for your federal loan which allows you to put more money toward your private loan and pay it off first and ASAP. 


Budget, Budget, & Keep on Budget 

Credit Advocates recommends everybody to live by a budget. Having a budget and sticking to it is imperative for those paying off a debt. You need to live the lifestyle you can afford NOT the lifestyle you can put on a credit card and pay for later. Living the lifestyle you can afford and paying off student loans consists of budgeting your money. Think about what you spend the most money on, your impulse purchases (and how to eliminate these), and what you can cut back on. Think about how you can spend less to put that money toward your student loan payments. The faster these loans are paid off, the less interest you will ultimately pay. Options range from turning down a few invitations for drinks to spending time outdoors for free or even moving in with family members to allow you to get your finances in order. 

Living with your parents is never fun. But you know what is? 
Sending in your last student loan payment... and having that extra money every month which you would have had to put toward a loan. 

Another option for those who have weekday jobs is taking up a job on the weekends. This way you will be making money and won't be able to spend it on weekend outings! 

CACC highly recommends everybody to fill out a budget, even if you don't have loans to pay off. Being able to visualize your budget and see where all of your money goes can be an eye opener for many. 

Click here to go to CACC's site and do an online, interactive budget. Remember to be honest!! These numbers are meant for you to see where your money goes and help you budget. 
Change Your Payment Plan 

If you have federal loans, there are several payment options available for you. If you never spoke with your lender, you were automatically enrolled in the standard payment plan. This costs the least in interest, but has higher initial payments. And if you're like thousands of our fellow Millennials... that won't work for you. What you need to understand about payment plans, and repaying anything with interest, is the longer the payment plan is & the lower the monthly payment is, the longer you'll be paying back your loan and the more interest you will ultimately pay. 

Lowering your monthly payment should not be an impulse decision. The longer your payment plan is, the more interest you will ultimately pay. 

Click here to go to the Federal Student Aid website and view a chart of the different repayment plans for federal student loans. 


If there are ever any questions about what was covered in each blog post, feel free to e-mail me at rsimon@creditadvocates.org and check out Credit Advocate's website at creditadvocates.org for an interactive budget worksheet & debt calculator. 
Check back soon for more information on repaying your student loans! 

Information is power so don't be left out of the loop! 




email: rsimon@creditadvocates.org | website: creditadvocates.org