How to limit your student loan debt
It’s estimated student loan debt now tops more than $1.5 trillion. Paying for those loans can be difficult and experts say the key is to plan ahead. On average, college students who graduated in 2018 owe more than $29,000 in loans, according to The Institute for College Access & Success.
“Here’s your quick back of the envelope formula. And that is only borrow the total amount of money that you think you’ll make in your first couple of years of work,” says CBS News Business Analyst Jill Schlesinger, author of “The Dumb Things Smart People Do with Their Money.” She says the best strategy is to avoid student loan debt in the first place.
“We want to start having conversations with our children maybe when they are in 8th or 9th grade and talk to them and say, ‘Here’s what this family can afford,'” according to Schlesinger. Those discussions might reveal the family can save money by considering schools nearby. “Maybe it’s better if I go close to home. Maybe I need to go to a state school or a community college,” Schlesinger says.
Schlesinger says for students who are facing debt, the first step is to go through your budget and try to get high-interest loans paid down. That’s what Megan Combs did. Combs went to college to pursue her dream of working in the arts, but the 32 year old is still paying off her student loans.
“Around this time last year, I owed about $66,000 in student loans,” she says. But, she took on a roommate and received a raise at work and that’s allowing her to pay off her debt faster. “My timeline for paying off my student loans this time last year was around 10 years and now with my living situation and my raise, all of that allows me to pay them off in four years,” she says. Combs is hoping for another raise which could help her do it even sooner.