The Do’s and Don’ts of Student College Debt

The best scenario is for students to avoid, or at least minimize, their college debt.  There are several things that students should, and should not, do to make this a reality.

While in high school, students should seek part-time jobs with companies that they could likely continue to work for in college and that offer tuition reimbursement programs.  Chipotle, for example, will pay back up to $5,250 a year in tuition costs for eligible employees.  McDonald’s offers up to $2,500 a year in tuition assistance to hourly workers.  Starbucks will actually cover the full tuition cost for employees enrolled in Arizona State University’s online program.

Students should likewise take their high school studies and SAT prep seriously, as most colleges award merit scholarships based on students’ GPA and SAT scores.  The good news is that whatever money is offered for a student’s freshman year is typically renewed for the next three years, as long as a minimum GPA (usually a 3.0) is maintained.  The more scholarship money a student is awarded, the less debt he/she needs to take on. 

Students should seriously consider the cost of attending comparable colleges.  While The College of New Jersey (TCNJ), Villanova, Drexel and St. Joseph’s are all highly regarded schools in relatively close proximity to each other, the cost of attending each may vary dramatically.  New Jersey students get “in-state” tuition at TCNJ, which is currently $16,923 for the 2019-20 academic year, including mandatory fees. Comparable fees at nearby schools, popular with New Jersey students, are $55,430 at Villanova, $54,516 at Drexel and $46,550 at St. Joseph’s. Of course, students should take into account that colleges may offer “merit scholarships” that greatly vary.

Once students are enrolled in college they should live simply, minimizing their expenses and using any extra money to pay down student debt before it even comes due.  While it might be tempting to charge spring break to a credit card, no one wants to be paying it off, with interest, years after the memories have faded.

After graduation, when college debt payments start coming due, it’s wise to pay off the loans with the highest interest rates first.  Also, there is typically a small interest rate reduction offered to those who opt to make monthly payments via direct deposit.

Some lucky students who take a job with the federal government may be eligible to have their student loans forgiven after they have been employed for ten years. Similar programs exist in some areas for teachers who work in impoverished neighborhoods.

In short, students should borrow the least amount possible and pay it off as quickly as possible.  Living frugally in the short run may allow graduates to live lavishly later on.

Susan Alaimo is the founder of SAT Smart. For the past 25 years, SAT Smart’s Ivy League educated tutors have prepared students for the PSAT, SAT, ACT, Subject Tests, AP courses, and all high school subjects. Visit www.SATsmart.com or call 908-369-5362.