By NJ Voices Guest Blogger/For NJ.com
By Courtney McAnuff
The stories are prevalent and reported daily: Student loan debt, now estimated to exceed $1 trillion, has become an albatross for countless collegians, recent graduates and their families. Federal and private student loan debt now exceeds U.S. credit card debt. It is unconscionable that any student would amass more than $150,000 in debt to finish an undergraduate degree. It is troubling that colleges and universities allow families to fall into such a deep sea of red ink.
Yes, ever-rising tuition and fees, and the relative ease to secure student loans contribute to the debt burden. But higher education, as an industry, fails to help families grasp the true cost of attending college by employing vague language, unclear conditions and obscure procedures that vary from school to school.
Moreover, institutions provide inconsistent support for families encountering the financial aid process for the first time. Yet, there are universal concepts that once demystified could restore balance. We need to bring common sense to the table.
How can families avoid outrageous college debt?
• Colleges need to be honest with families. With nearly 4,000 U.S. colleges and universities, odds are at least several meet the educational and geographic criteria of students without mortgaging their financial futures.
If parents cannot afford their child’s dream choice, they must have “the talk.” But schools must be prepared to help students match their interests with the strengths of financially reasonable alternatives. In most cases, the college’s name on the diploma is less important than the knowledge it imparts.
• Students and families need to make smart choices. If savings are limited and budgets are tight, does it make sense to select a “big-ticket” college or one that offers minimal financial aid? Explore in-state public college options, but avoid out-of-state publics, which charge much higher tuition to nonresidents.
For many cost-conscious students, community colleges have become the choice for the first two years. Remember, $100,000 borrowed for a four-year degree can lead to monthly loan payments of $800 for 20 years. Struggling to pay off this kind of debt is a tough way to start any career.
• Borrow wisely. Loans should cover direct educational expenses, not private dorm rooms or spring-break trips. Carry as full a course load as practical to graduate on time. Become familiar with often-confusing federal student loan regulations and seek clarification, if necessary.
Keep current with outstanding balances. Be sure you attend the loan entrance interview; it must be offered by all colleges. Remember, you cannot declare bankruptcy on a student loan.
• Learn the true cost of attendance. While the costs of tuition, room, board and mandatory fees are usually clear, remember the incidentals, starting with books, ending with holiday trips home and everything in between. Some institutions gloss over personal expenses. Others are less than forthcoming in their financial aid letters, blurring the line between grants and loans.
Colleges must offer a Net Price Calculator, which helps families get a customized indication about the aid for which they might qualify. Applicants must ascertain that the institution’s financial information is current and that the source of and conditions for all aid, including a repayment schedule, are spelled out.
• Understand your scholarship offer. When institutions offer scholarships with difficult renewal criteria, it is called “front-loading.” The scholarship facilitates initial enrollment, but terms can make it difficult to maintain in subsequent years. Students must understand the terms of scholarship offers and confirm their renewability. They should ask admissions or financial aid officers about scholarship retention rates.
• Become an educated consumer. Know the differences among public, private and for-profit institutions; scholarships, grants and loans; subsidized and unsubsidized loans; government and private loans; and yearly and compounded interest.
Above all, exercise common sense. Families need to understand that choosing a college is not just an academic decision, but a financial decision as well — one that has important implications for the financial health of our next generation.
Courtney McAnuff is vice president of enrollment management at Rutgers University. Share your thoughts at njvoices.com.