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Friday, March 26, 2010


Steve Cole reports:

Here are a few simple ways.

1. Write checks. Seriously, you owe the money, and you cannot even bankrupt your way out of the debt, and it just keeps adding interest, so just cut your lifestyle and put every dollar you can into paying them off. Most of them are structured for twenty years, so an extra dollar paid today is going to save you at least an extra dollar in interest over the payment schedule. It's just like a mortgage. Pay a few dollars extra, or a lot of dollars extra, and the final payment date starts accelerating toward you.

2. Avoid big student loan debts in the first place. For the first two years, live with your parents and attend community college. You'll get better versions of the same general "everybody has to take them" courses. Go to a state school, one close to home. State schools do a fine job and are much cheaper than private schools. Sure, for the top 1/10 of 1% of jobs, Harvard and Stanford may make sense, but you're not going to get THOSE jobs anyway, so get the same degree at State University or State Tech and save money. If you can go to a four-year school and still live with mom and dad, do it. A lot of student loan debt is living expenses. Too much student loan debt consists of living it up expenses. Here's a hint. If you spend more time at parties than in class, you're doing it wrong. Live simply and modestly. Don't put four trips to Cancun on your student loans!

3. Get a degree that is going to get you a job. Basket Weaving and History of Polka Music are not going to get you a job, and are going to be regarded as a soft easy course you took so you could just party, party, party and avoid being a grownup for as long as you could. Get a degree that gets you a job. If you just don't have a passion for medicine, engineering, law, or accounting, get a business degree, which at least has some skills you can use to (wait for it) get a job. Some degrees are considered to be of little use unless you're going to be a teacher of those subjects. Other degrees are considered useless at the bachelor degree level and require a masters or doctorate to be considered serious degrees that get you a job. The worse possible thing you could do is spend $100,000 getting a job that will pay you only $25,000 a year. If your passion is for a noble but low-paying job, get a low-cost degree for that job from a state university and live at home.

4. Have a part-time job during college. It pays some of your bills, gives you some work experience, looks better to a future employer, and keeps you out of those money wasting parties where you're more likely to get an arrest record or an unplanned pregnancy than anything worthwhile. You might even consider ROTC or the National Guard, which provide college money in exchange for some honorable growing experiences.

5. Get a scholarship. Spend a whole summer before college doing nothing but applying for every grant, aid package, and scholarship you can find. Make this a serious full time job, or at least a part-time job. Consider a few years in the military (resulting in free college at a time you're a little older and less likely to waste your four years in college on stupid stuff like endless parties and degrees in underwater basket weaving).