Debt Advice: How To Prevent College Debt

If there is one area in which millions of people need debt advice, it is paying for college.  Can you afford college, and can you get your degree without creating a tremendous amount of debt?  If it is your child in college, how much debt should you take on?

We?ll tackle the second question first because it is shorter.  None.  Do not take on debt for your child?s college education.  Your child has decades to work and pay off debt.  You may only have a few years until retirement.  You can help pay for college, of course, but you should not take on loans or take out a mortgage or second mortgage on your home in order to pay the school bills.  You do not want to risk your home or your retirement.  It actually does benefit your child because college loans are typically low interest and can be paid according to different schedules.  They also help your child establish and build good credit.

College students will face about $21,000 in loan debt on average.  Students typically carry credit card debt of over $3000.  Compared to $21,000, this may not seem like a big deal, but when you consider the interest rates, finance charges, and other miscellaneous fees, you will be paying for that $3000 for years.  In addition to your college loans and other financial obligations, this can be too much to handle, especially for those who are just starting their careers.

As the cost of college tuition rises steadily, more students are forced to buy books, food, and even classes with their credit cards.  Can you avoid college credit card debt?  If you possibly avoid it, do not go to college with a credit card.  If you do feel you need one for emergencies, make sure you are clear on what an emergency is.  Needing car repairs so you can get to work is an emergency.  Buying pizza for your dorm friends is not.

If you do have a card, control your spending and cut out non essentials.  If you must buy books or other necessities, make regular payments and try to pay extra each month. Get a work study job or one off-campus; get roommates to reduce cost; skip buying groceries and eat at the cafeteria.  Most colleges require on-campus students to have a meal plan, so you might as well take advantage of it.

The key is to realize that credit card debt is an albatross that you will be lugging around for quite some time.  Do not think it will just blend in with student loans:  credit card debt is a very different beast.  Budget your money; it is never too early to start handling your finances responsibly.

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