3 Steps to Keeping Student Debt Manageable
The key to managing the rising amounts of debt that students are graduating with, one article suggests, is that students need to know “how much debt they can reasonably absorb.”
Knowing how much debt you’re getting into and sticking to preset maximums or boundaries is paramount because it keeps the debt from getting out of control in the first place, long before the debt becomes unmanageable.
In “3 Tips to Limit Student Debt“, the author describes 3 key lessons students and parents need to learn in order to keep debt manageable.
- Relate your debt to future pay
- Guesstimate what you’ll earn
- Choose the right school
The first two lessons deal primarily with comparing the final debt (the debt upon graduation) with a reasonable expectation of a starting annual salary. “‘Total education debt at graduation should be less than the expected (annual) starting salary,’ says Mark Kantrowitz, publisher of Fastweb.com and FinAid.org.”
The third lesson has to do with understanding how much financial aid your school of choice is really giving you, and making sure that you set a “maximum student debt for [yourselves].” Choosing the right school also means understanding the repayment rate of the school. “A lack of progress at reducing debt could indicate that grads are deferring or defaulting on their student loans, perhaps because they can’t get a job. That, in turn, raises questions about the training they received at the school, Kantrowitz says.”
