The average amount borrowed by America’s 2015 graduating class was $31,100 — $12,600, or 68% more than for the Class of 2005. Depending on how he or she chooses to repay, a member of the Class of 2015 could spend up to $57,865 to pay off a $31,100 debt.
But there’s a surefire way to graduate with less debt. Believe it or not, it’s best illustrated in an old Saturday Night Live skit, “Don’t Buy Stuff You Cannot Afford!”
Funny skit, though it’s message sounds like another old cliche from those who “nag” students about controlling their spending. Still, like many cliches, there’s much truth in this message.
You have to borrow, from student loans or credit card companies, to buy something you can’t afford. And in the future you’ll repay what you borrowed — essentially dedicating future earnings to pay today’s expense, plus interest that builds up on that expense.
Fortunately, there are simple, sensible things you can do to hold the line on how much college debt you’ll have to repay.
Take Annie, a freshman. Annie finds it difficult to get going in the morning so, on the way to class, she spends $4.95 of her federal loan funds on a latte grande from a well-known coffee shop. Annie’ll pay another 42 cents in the sales tax on that purchase. And although the current interest rate on her federal loan is the lowest in 10 years, Annie will pay back as much as $10.00 for the $5.37 she borrowed to buy today’s latte.
If student loans can almost double what Annie ultimately pays for one latte, imagine how they’ll multiply the extra costs you’ll incur to live for 9 months in an expensive, high-amenity apartment; or to pay a campus parking fee for a car you could leave at home; or to eat out four-five nights a week instead of cooking in your apartment or chowing down in your dorm’s dining hall! As for Annie, she could get her pick-me-up and save money by drinking homemade coffee or asking for a home latte machine for Christmas.
There’s an old saying — “Borrow to live like a professional while you’re a student and your loan payments will force you to live like a student when you’re a professional!” Don’t victimize yourself! Find ways to borrow only for absolutely necessary expenses!
College Affordability Solutions can help devise strategies to limit college debt. Call (512) 366-5354 or email firstname.lastname@example.org to request such help.