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The Truth Hurts: The Unseen Burden of Student Debt

It was a small family. The father was the breadwinner and worked a comfortable job from home in the oil and gas industry. It was hard not to get a bit envious after walking into such a wonderful home and hearing about his job and lifestyle; I wanted to be this guy one day and have the set-up he had.

As we sat down and started to talk, we went through the initial questions and he seemed to be doing perfectly well from a financial perspective. He was making a healthy $92,000 a year and was covering his mortgage easily.

I was overjoyed to hear that he had a relatively small amount of credit card debt (~$3,000) and NO car loans. I was loving this until the next question:

Do you have any other loans?

He said, “as a matter of fact I do. I have a college loan…of $160,000.”

Suffice to say, I was puzzled.

How did a person who made so much money and lived such a comfortable lifestyle have such a massive amount of student debt?

Lack of Planning Leads to Excessive Student Debt

Apparently, he had changed majors and then transferred schools without realizing the interest on his unsubsidized student loans was growing.

Not only did he lose his scholarship after transferring out of the previous program, but it took him two extra years to graduate. That means he had to borrow a lot more money to fund his undergraduate degree (and then his masters)

This situation is not uncommon. Many students never consider the financial repercussions of transferring or changing their major.

College students are often unsure of what they want to do. How do you combat this? Here are two suggestions:

  1. If you attend a four-year college, find an advisor, mentor, administrator, or faculty member who can help you explore different areas of interest while still keeping on pace to graduate on time.
  2. Consider community college for two years at a fraction of the cost, figure out your interests, and then transfer to a school that fits those interests. This prevents a lot of wasted time and money.

Student Loan Debt Statistics: A Bird’s-Eye View

To put things into perspective, here are some general student loan statistics, according to Student Loan Hero and Investopedia:

  • 54% of college attendees take on debt to pay for their education.
  • After graduation, the average loan debt per student is $37,584.
  • Among the class of 2019, 69% of college students took out loans. They graduated with an average of $29,900 in debt.
More Intriguing Statistics
  • Over 50% of students don’t take full advantage of federal loans, borrowing private loans before they’ve exhausted their available federal loans
  • 91% of undergraduate loans were co-signed by someone else during the 2019-20 academic year.

The obvious takeaway: higher education is expensive, but many depend on it to secure a good standard of living. Clearly, loans are a big part of paying for college. What is worrisome is an almost passive reliance on debt and a lack of understanding before signing on the dotted line.

READ: How to Navigate Your Undergraduate Student Loan Options Wisely

Too many students and parents don’t really know the rules of the game when it comes to paying for college. And it’s hard to blame them, college pricing is notoriously confusing.

As a result, this is the thought process: just get into college and the rest will figure itself out.

No, no, no.

It’s crucial to have conversations about financial repercussions in high school. Parents need to educate themselves on the risks so they can be transparent with their kids.

It’s not uncommon to run into people who all say something similar, “I was 18, I had no idea what was going on. I just knew college was what you were supposed to do.”

To help break this trend, here are four things parents and students can do to mitigate the financial repercussions of student loans down the line:

Four Things to Do Before Taking Out Student Loans

1. Get Serious About Private Scholarships

Many students that apply for loans do not apply for scholarships that are available out there. reports that there are over 1 million scholarships and fellowships available!

It’s easy to chalk this up to the supposed laziness of the average teenager, but let’s be honest: high schoolers are overwhelmed and overworked, having to worry about performing well in school, at home, and in their extracurriculars. The last thing they want to do is submit scholarship applications after finishing their college applications.

As a parent, it is very important that you encourage your student to go for that extra money as early as possible. Sit down and explain to them the financial consequences. Many kids are just not aware of how much money is at stake here. They also may not be aware that there is money out there for them if only they put in a little more legwork.

READ: When Should You Apply for Scholarships?

Encourage your child to send in scholarship applications that fit within their skills, interests, or passions. It is tough for teenagers to display the self-awareness, confidence, and self-advocacy that scholarship applications demand. All the more reason to encourage them to do so. It truly is a life lesson.

Where Do We Find Scholarships?

While there are plenty of online scholarship engines out there, these sites tend to provide very competitive national scholarships and will drive you insane with their excessive emailing. There are a few scholarship engines out there that we do recommend:
1) Scholarship Owl

2) Going Merry

If you want to increase your odds, go after local scholarships. As championed by our friends at The Scholarship System, use Google to do a keyword search in your area for a scholarship based on a specific interest/hobby/skill, or location. Utilize college counselors and friends/co-workers to help find scholarships offered by local businesses. These small ones really do add up.

Want to delve deeper into the private scholarship process? Check out the resources at The Scholarship System, run by our friend Jocelyn, who paid her own way through college with 6-figures in private scholarships.

2. Apply to Schools That Are a Good Fit

Fit, fit, fit. We will continue to bang this drum until the drum breaks, and then we’ll just get a new one.

Find schools that want your student, are affordable, and will help your student thrive socially and academically. Research the right questions to ask and don’t forget the financial piece.

Many schools are geared toward particular majors or programs. Grants and money are given or allocated to students of a particular major. It is important to do your research on which school is good for your particular major.

If you have a very specific academic or career interest, like Marine Biology, then Harvard probably is not the place for you. Do your research and find out how much funding is given to that department. Do they award scholarships? What is their emphasis on teaching undergrads? Do they give merit aid to good students or do they primarily focus on need-based aid?

All the information is out there; you just have to ask around and look for it.

3. Understand the Mechanics of the Loan

Go shopping and get the best deal. Compare interest rates, origination/other fees, and payment schedules. Be aware of interest capitalization.

One of the most discouraging things to happen to students is graduating from college only to realize that their unsubsidized loans have been gathering interest all four years of school.

Before signing on the dotted line, ask questions such as:

  • Can I pay my loan while working in college?
  • What if I fall back on payments?
  • How is interest accumulated and can that be negotiated later on?
  • The more you ask the more you will understand your loan and ways to tackle the loan faster.

If you sign up for these loans carelessly and go to school with no plan for the future, you could be financially hamstrung for decades (parents may suffer consequences as well depending on the nature of the loan!)

By paying attention to details, budgeting, and reading the “fine print,” you will be in a better financial place and not be saddled with unmanageable debt.

Student loans are simple to obtain, but they are so hard to get rid of.

4. Exhaust All Financial Strategies

The key to paying for college is to start early and put together a plan that fits your unique family needs. Even if you have a student in 12th grade or in college, there are still things you can do to help your situation.

Here at The College Funding Coach, we are focused on helping families save and pay for college without jeopardizing their future. Our free Little-Known Secrets of Paying for College webinar will walk you through financial strategies to maximize the efficiency of your money and preserve your retirement nest egg while saving and paying for college.

You can view our selection of free on-demand webinars here.


PK Chandiramani

Prakash Chandiramani The College Funding Coach











Related Reading:

14 Ways to Minimize Student Loans

How to Talk with Your Parents about Paying for College

Choosing the Right College: Look Beyond the Brochures

Navigating Your Undergraduate Student Loan Options Wisely

Save for Retirement or Pay for Your Kids’ College?

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