Ways to Avoid Student Loan Debt
LinkedIn originally published this article as part of the LinkedIn’s Avoid Student Debt Series.
By: Robyn Shulman, 2016
Before the Internet was alive and well in the eyes of the public, there was very little awareness built around different ways to save money for higher education. As a child, I grew up in an underprivileged environment and quickly understood the role of finances and how it impacted my life.
By the age of 12, I was working after school in a local mall scooping ice cream and baking Cinnabons. At 17, I became a waitress at TGI Friday’s to help pay for college in any way possible. I attended junior college and then went on to a local four-year university in Chicago to attain my teaching certificate.
As luck would have it, TGI Friday’s paid for a good portion of my education. It took a lot of time, research and hard work to find a job that helped me move the education needle forward. Although I didn’t have the digital world in my pocket with instant access to information, I was able to accomplish my goals and still found great success.
Fast Forward to 2016
Today, parents and students have the ability to access endless amounts of financial information and potential resources to help pay for higher education. Financial education, research, scaling down information and taking action on potential opportunities are keys to progress. Did you know that billions of dollars in grants and scholarships remain unclaimed each year?
Parents, From the Beginning, Financial Education is Key
Teaching a child about money and financial responsibility is a very important part of becoming a parent. Financial education should begin at a very young age through modeling and behavior. Parents should not rely on the education system to teach their children about finances, as most of the time, it is not the case nor does it fit into a cookie cutter environment.
Parents can model financial responsibility early through everyday experiences. For example, taking a trip to the grocery store, using coupons and saying ‘no’ to a child’s wants rather than needs are beginning ways to exemplify financial responsibility.
Children in their primary years can learn the value of money through play, pretend currency, cash registers, and shopping games. As the teen years approach, parents can begin to discuss the value of money, demonstrate living within means while having open discussions in reference to making smart financial decisions. Children who are not exposed to financial education can run into problems as young adults, lacking the ability to understand or manage money, budget correctly, save or even balance a checkbook. More often than not, without this guidance, they will most likely end up carrying heavy debt at a very young age. Educating children about financial matters early on will enable youth to understand the value of money, learn how to save it, and make wise college decisions to avoid financial disaster.
For More Ideas, Stop By The Money Side of Life, A Financial Education Website
As an educator, I can say without hesitation, many high school graduates are not educated or prepared financially, and this extends into their careers. The Money Side of Life™ makes financial education interesting, relevant and engaging.
The Numbers Don’t Lie
Today, given all of the information we have at our fingertips, Americans are more burdened by student loan debt than any other time in history. Growth in student loan debt can be compared to a ticking time bomb threatening to explode upon the U.S. economy.
According to U.S. News Best Colleges rankings from 1995 to 2015, university inflation has grown at profound rates. For example, since 1995, the average tuition at private National Universities jumped 179 percent while out-of-state tuition at public universities rose 226 percent. For those who stay at home, in-state tuition at public National Universities grew the most, with an increase of 296 percent. These increases also include the fees that trail along with each program of study.
Let’s take a look at a few basic student loan facts and a few very alarming facts:
Student Loan Debt Facts:
*Right now, student loan debt in the United States is $1.32 trillion
*43.3 million Americans are walking around with student loan debt
*Student loan delinquency is at a high rate of 11.6%
Alarming Facts About Student Loans:
*Americans owe more in student loan debt than credit card debt
*65% of high-debt student loan borrowers didn’t understand the terms of their loans when they signed their paperwork
*The U.S. Government can garnish wages and withhold tax-refunds to satisfy unpaid student debt
*Only 28% of student loan borrowers know that the U.S. Government can garnish wages and withhold tax refunds to meet student loan debt requirements
*If a student passes away while paying off a student loan, the debt can be passed onto their family members
What Can We Do? Take Action Now
Indeed, these facts are quite intimidating. Nevertheless, there are various strategies and resources parents and students can use to save money without falling into the higher education debt trap. With digital information, college apps, fundraising opportunities, and vast online communities, parents and students can and should take advantage of these vast resources. In addition, parents and students should work together on this journey. As a team, they will find greater success by maintaining ongoing communication, sharing research findings, as well as being open-minded to various favorable circumstances. Although research, organization and filling out paperwork can take a great deal of time, most will find the benefits outweigh the cost.
Where To Begin
There are various strategies and resources to find grants, scholarships, unclaimed funds and even ways to study abroad to pay for higher education.
Stop Leaving Money On The Table
FAFSA stands for Free Application for Federal Student Aid and it’s the form parents and students need to fill out to qualify for federal aid as well as state and college aid programs. According to a recent study by NerdScholar.com, high school graduates in the U.S. left more than $2.9 billion in free federal grant money unused over the last academic year (via 2014). Furthermore, 47% of all 2013’s high school graduates didn’t even complete the FAFSA form, which is the first step to find out if students are eligible for financial aid.
The biggest mistake in this process was the simple lack of action, or basically, parents and students chose not to complete the FAFSA form. And there is help out there. Need help? Parents can find free assistance with the FASFA form at fastweb.com.
Parents of college students should check in with their human resources department to review benefits and paperwork. Quite often, parents may not be aware that their employer offers college scholarships for their children.
Many companies now offer tuition assistance to full and part time students. Students should set some time aside and chat with a supervisor to see if their company provides tuition assistance or scholarships. They should also inquire about company grants and tuition-reimbursement programs, especially if the student is interested in remaining with the current company after graduation.
Government Grants And Scholarships
Grants and scholarships are often called “gift aid” because they are considered as free money or financial aid that is not required to be paid back.
Grants and scholarships can come from the federal or the state government, a college or career/vocational school, or a private or nonprofit organization. Students can apply for any grants or scholarships in which they may be eligible.
There are four types of grants and they can be found StudentAid.Gov.
*Federal Pell Grants
*Federal Supplemental Educational Opportunity Grants (FSEOG)
*Teacher Education Assistance for College and Higher Education (TEACH)
*Iraq and Afghanistan Service Grants (Military)
Full Automatic Tuition: This is a compilation of large scholarship awards that are automatically awarded based on university and selected criteria. The awards included in this list are for automatic full tuition and can be found here.
Yolasite National Merit Scholarships: This is a compilation of large merit awards for National Merit Finalists and Semifinalists and can be found here.
Dual Enrollment Pell Grant (new): Check to see if your community or local college is part of the Dual Enrollment Pell Grant.
About: As of this month, 44 postsecondary institutions were asked to participate in an experiment that allows students who are taking college-credit courses to access Federal Pell Grants during high school. As part of this experiment, an estimated 10,000 high school students will have the opportunity to access approximately $20 million in Federal Pell Grants before they open any college door.
Dual enrollment is an exciting and new program to improve academic outcomes for students, particularly those from underprivileged or lower-income backgrounds.
The Boren Scholarships program is an initiative of the National Security Education Program, which provides unique funding opportunities for U.S. undergraduate students who want to study less commonly taught languages in world regions critical to U.S. interests.
Boren Scholars represent an important group of motivated students who want to work in the US federal national security arena. In exchange for funding, Boren Scholars commit to working in the federal government for at least one year after they graduate.
Higher Education Crowdfunding
Today, students are asking strangers to help them with higher education expenses, find sponsors, mentors and make social connections. And people are responding. Such platforms include YouCaring, Indiegogo Life, GoFundMe, DreamFund, PigIt, Zerobound and Plumfund. Students and parents should research these sites to see if any are a good fit for their needs.
Company Education Programs
Going to college for free or close to free is a rare occasion. However, many employees are now enjoying these generous perks. The following companies listed below offer generous and flexible higher education programs to their employees, while they are working at their current job.
The tuition reimbursement and assistance programs are some of the most generous and flexible programs I found, as they can cover college costs and do not require employees to stay with their company after they graduate. Be sure to check out their websites, as all programs have different partnerships, eligibility requirements and are subject to change anytime.
1. United Technologies: Running since 1996, UTC has an Employee Scholar Program. According to UTC, out of 212,000 global employees, 35,000 have earned degrees in a given field of their choosing. Degrees earned run the line from Associate’s to MBA’s.
2. Dick’s Drive-In: A small Seattle burger chain will pay up to $25,000 for an employee’s education, which includes various perks. Those perks can be found here. Jim Spady, Dick’s vice president, acknowledged that his company is a “transitional employer” and that most people who get the benefit will eventually move on to other jobs.
3. Starbucks: In April 2015, Starbucks expanded its higher education offerings to cover four years of tuition at Arizona State University (ASU) for all full-time and part-time employees. Students can choose from ASU’s 49 online degree programs. Check out Starbucks College Achievement Plan for more information.
4. Fiat Chrysler: Fiat Chrysler has expanded its higher education offerings to include employees, their children as well as their spouses. Need I say more? Check out their offerings today.
5. UPS: UPS has long provided educational benefits to employees. Employees – including part-time workers – can earn up to $25,000 in benefits over four years. Check out their amazing Earn and Learn program today.
Slow it Down
As adults, we are guilty of making quick purchases, falling into debt and living beyond our means. Although higher education debt is growing at a rapid pace, we can slow down this debt clock today. If we teach kids about finances, conduct research, find college resources and take action by following through with more thorough and thoughtful decisions, we can change the way we live. We can provide a more stable economy with an educated society.
Have you avoided the student loan debt trap? If so, please share your story and your resources here.
Sources for this article include:
1. Student Loan Hero
2. Millennial Money Man
3. Boren Scholarships
4. College Confidential
5. EdNews Daily
6. US News Best College Rankings
7. College Confidential
8. Brass Media-The Money Side of Life
9. College Board