You are 18 years old, about to graduate from high school and want to take the next step in furthering your education. For most, that step is college. So you apply, are accepted somewhere, and now are faced with the task of paying for college. This could be a little difficult due to the fact that the cost of college is extremely expensive. After using savings, if there are any, the only thing left to do is use loans. Sure, loans answer the problem for now, but what happens after you graduate is the problem. The last thing anyone wants is to be over their heads in debt.
This situation seems to be becoming more and more common for families today. Tuition rates have sky-rocketed over the last few years, driving families more and more to loans to pay for their child’s education. The overall cost of tuition at four-year public schools rose 6.6 percent from last year. At four-year private institutions there was a 6.3 percent increase. Inflation only rose 2.8 percent in the last 12 months. Once again, the cost of college is much higher than the rate of inflation.
With this being the case, families are struggling to come up with the money to pay for their child’s college education. Often times, parents do not start saving money for college early enough. By the time their child is ready to go to school, they do not even have enough put away to pay for a full semester.
Federal loans do not really provide enough money, so private loans are another answer. The only problem with private loans is they can put students and their parents in a great deal of debt. Some students do not even think about the amount of debt their loans could put them in, while others realize what could happen.
“I’ve realized that I’m going to be in debt after I graduate. I think that federal loans should be more supportive because as the cost of college gets higher, fewer kids will be able to go to college and the job market will suffer.” Ryan Day, a freshman finance major, said.
A recent survey conducted by the College Savings Foundation found that parents are really not saving as much as they should be. They found that only 54 percent of the 447 parents surveyed had less than $5,000 saved for their child’s education. 27 percent had not saved anything at all. The survey also found that, of the people polled, they expected between five and 10 years to pay off the loans used.
One of the most important steps in preventing this last minute struggle to pay is to start saving and investing early. There are many different types of savings plans and investment options offered by banks to help put away money for college. The more parents can save before their child goes to college, the less they will have to worry about relying on loans. This might not be able to help most of us now, as we are already in college, but it could help us help out children years down the road.
Using loans to pay for college is basically inevitable. The cost of gaining a higher education is too expensive for most to pay for without help from many different types of loans. The thought of having to deal with all of this debt after college is very frightening. No one really wants to be in debt for years paying off their education. With the proper steps of saving and investing before college and putting money away to pay off the loans after college, the situation could become a lot less scary.
