Student Loans: Think Before You Borrow

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On average, a college graduate student earns just over $47, 000 each year. On the other hand, individuals who possess only a senior high school diploma earn average annual wages of around $26, 300. If we assume that an individual will work for 40 years of his or her life, a college graduate will out earn a high school graduate student, on average, by more than $800, 500 in a lifetime. So it seems that college is a no-brainer when it comes to income, right? Not necessarily. The income figures listed above fail to take into consideration not only the amount of debt that many college students incur but the possibility costs and the time value of cash that comes into play when a college graduate student is making loan payments instead of investing his hard earned dollars in to the stock or bond market. This really is also as good a place as any to indicate with some irony that Bill Gates, the sometimes (depending on stock exchange fluctuations) wealthiest man in the world, failed to graduate from college. So , is college worth it? How do you maximize the value of your education to get the most out of the debt you incurred?

Choose a Practical Major

Let us assume that you’re not Bill Gates, and, for the sake of argument, that you’re not in your dorm room creating the next Microsoft or Facebook. You are probably going to have to get a job. This is an area in which a college degree will really help. While a degree is no guarantee associated with employment, today, and historically, the unemployment rates for college graduates are considerably lower than they are for those who only have a high school diploma. Recent statistics, in fact , show that a senior high school graduate is almost twice as likely to be unemployed as a college graduate.

All education has real value. Period. But not all education includes a practical or monetary value. So , considering that we are a financially oriented weblog and, notwithstanding the inherent social value of a college education, this short article is going to focus on more crassly economic side of things.

Without always making major to major reviews, if you simply determine that you’re doing a job that does not require a degree, although you have one, you are not obtaining a very good return on the investment you devoted on your college education. Neither your return on degree (the extra income you’re earning because you have a college degree, compared to the cost of getting that will degree from a particular school) nor your return on major (the amount that you’re earning because of choosing one major over another) is paying off for you. If you want to maximize the return on your college investment decision, get a computer science, nursing or even engineering degree from an in-state public school. If these aren’t exactly your dream careers, your diploma will still open doors to suit your needs; and regardless of your degree or even your major, college is no assure of a financial payoff. If you’re curious about an up to date estimate of how well your chosen career will reward a person monetarily, check out Payscale. com.

Keep Student Loans in Check

Another way to maximize the value of your education is to not borrow more than you absolutely need to. Savings, scholarships, grants, credit by examination, revenue from a job – all of these elements should be used toward college before you decide to borrow money to attend school. Especially for an undergraduate student just beginning his or her career. Those first few years out of school will likely be the lowest revenue earning years of your career. They will also provide the unpleasant distinction of being the years during which the largest percentage of the salary is going toward the transaction of your student loan interest.

This can be particularly crippling from an opportunity coast perspective because those our childhood are the years during which you will see probably the most return on the dollars you’re preserving. So , the more dollars you can spend and save instead of paying toward student loan interest, the better off you can be in the long run. You may live somewhat a lot more meagerly than you like during your 4 or so years of college, but nor having that debt follow a person around for another ten or even 20 years down the road will allow you to enjoy far more stress free years than your peers.

So , after all is said and done, is it worth it to go to college and to borrow money to do so? The answer, ultimately, is up to you. If you feel fulfilled and happy and don’t thoughts the loan payments, then that is anyone else to judge? But , if scratching by for 10 years after scratching by for four years of school doesn’t sound like the self-actualization you were looking for, then choose a degree that you can earn a good living from and keep your school borrowing as low as feasible.

The post Student Loans: Think Before You Lend appeared first on Affordable Schools On-line .

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