Tuesday, August 31, 2010

Got Student Debt?



Getting a quality education is one of the best investments you can make. According to the U.S. Census Bureau a person with a bachelor's degree is expected to make approximately double the salary of someone who only finished high school. With a degree you won't only be making more money, but also performing work that is more engaging and requiring greater mental acuity.



Source : http://www.earnmydegree.com/online-education/learning-center/education-value.html


That being said, it is difficult these days to get a quality education because of the rising costs of tuition. That is why many of us students have to rely on student loans. According to Statistics Canada the average government student debt owed at graduation is $19,500 for a bachelor's degree. It can be very tough to start your life after graduating with such a debt load on your back. Here are a few tips to avoid this debt and to help pay it off sooner.


1) Set Goals - A very close friend of mine had approximately $14,000 of student debt when he graduated. He set a goal to pay off the debt by the end of year. Luckily, he got a job after graduating which paid a yearly salary of about $50,000 a year. This is a good salary, however there are a lot of other living expenses to pay for when you are working, especially away from home. By setting a goal and making the payments he was able to pay it off in 8 months! A whole 4 months earlier than his goal. Write down your goal and it will become real.


2) Cooperative Education - One of the reasons my friend's student loan is less than the average is because he was in a cooperative education program (coop program). A coop program is where you work paid internships as you're getting your degree. Usually you either work an internship over the summer or at some universities you alternate school and work terms in 4 month intervals. The beauty of coop is that you make a pretty decent wage (usually better than minimum wage), get work experience in an industry that you are studying, and make contacts at companies that you may work at after graduating. The University of Waterloo in Canada has the longest running coop education program in the country. I would highly recommend going to the University of Waterloo because of their outstanding coop program (also for their outstanding engineering, math and science programs). One draw back is that the program typically takes 5 years instead of 4, but you'll be leaving school with far less debt and possibly a job!


3) Work Two Jobs - Once you've set your goals you can focus your efforts like a laser. You have a workable time frame in which you wish to pay your debt off. It's difficult to start your "real life" as long as that debt is lingering over your head so it's best to get it off your back as soon as possible. A lot of graduates work two or three jobs simultaneously to try to pay off their loan as quickly as possible. Your second job doesn't have to be glamorous as long as you're getting hours and being paid at least minimum wage. For one summer I was working two jobs simultaneously to save for my upcoming tuition costs. During the day I would work construction and at night I would work selling ice cream at a local shop. It won't be easy, but you can do it!


4) Scholarships, Bursaries, Grants and Debt Forgiveness - There are always tons of scholarships, grants and bursaries that are available to students. Sometimes there aren't too many students who apply since there is so much paper work involved such as: reference letters, writing a letter of interest, transcripts and application forms. People who get discouraged by a little bit of paper work makes your job easier. Since there are less applicants, there is a good chance you can get a scholarship, grant or bursary. There are a lot of special interest group scholarships so it's best to browse through what is applicable to you. Whether you're a woman in science, an athlete or an international student from Pakistan, there are some scholarships and grants specifically aimed to fit your circumstances. Apply to them all and you'll be pleasantly surprised when you get one.

5) Save! - Tuition fees keep increasing every year. There are always extra fees being tacked on. Since the summer, the University of Waterloo has implemented a program where our graduate student card doubles as a bus pass which I think is great. However, now our tuition has increased by about $50/term. Tuition fees continuously increase over time, so it's best to start saving early. This is really a message for those of you who are going to be attending a post secondary institution in the next couple years, or for those of you who have children. Definitely one of the best investments you can make towards your child's future is a quality education. You can open a registered education savings plan in Canada which is an excellent way to start saving for their future. For more information check out: http://www.hrsdc.gc.ca/eng/learning/education_savings/public/resp.shtml. Save early, it'll make a huge difference when you graduate!

Here are two excellent videos about student debt:
Lynnette Khalfani author of "Zero Debt for College Grads"




Dave Ramsey, personal finance expert author of "The Total Money Makeover"

For more information on debt check out:
Know Your Debt
http://reynold-savemoney.blogspot.com/2010/08/know-your-debt.html
Pay Off Your Debt or Invest?
http://reynold-savemoney.blogspot.com/2010/08/pay-off-debt-or-invest.html

3 comments:

  1. In an era of technical development, we all have high ambitions. The attraction of modern amenities and the higher cost of education are forcing students to opt for loans. Students are digging more to get burdened with student debt in the long run. Students under debt are often advised to go for free counseling with consolidation experts.

    These experts can teach them how to retain their credit worthiness and how to remove the burden of student debt (Student Debt - Rising demand for Student Loan).

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