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Was Your Degree Worth the Debt?

shutterstock_1220262If pondered a future in which you’re up to your eyes in student loan debt and unemployed, you’ve probably wondered if that degree is going to be worth it. If you plan properly and borrow responsibly, you should be able to pay off your student loans. Get some tips, and learn some some tricks for avoiding the degree-debt blues.

It’s only natural for students considering college loans in this today’s economy to wonder if their post-graduation income will pay off their education debt. While there are no guarantees for a rapid financial rebound, informed students can take plenty of action now to ensure that they don’t borrow beyond their ability to pay. And the value of continuing education in fostering higher lifelong earnings can be a winning argument for assuming prudent loans.

Consider these variables before signing your loan agreements:
1. Have you evaluated the education requirements for your chosen career?
2. Are you attending an affordable school, or are you paying more tuition for a big-name college in hopes that your degree brings top dollar in the workplace?
3. Given the current government reported earnings in your chosen profession, are you borrowing more than your anticipated salary will bring to retire your debt?
4. Can you begin your education at a two-year college, slicing your four-year education costs without compromising your end degree?

The U.S. Bureau of Labor Statistics has released median annual earnings for the wide range of professions commonly held by American workers. It also cites predictions for job openings during the 2006-2016 decade. You might begin your research there before determining how much you intend to borrow and the size of the debt you’ll assume.

In 2002, the average public school graduate entered the workforce with $17,000 in loan debts. Private college grads carried an average $21,200 debt. Developing an in-college budget and sticking to it can help you save money before graduation and prevent you from borrowing more than you need. Some students even begin repaying loans before they graduate by taking part-time jobs, or applying for scholarships and grants. The consequences of defaulting can not only cripple your ability to live on your earnings, but ruin your credit rating right out of school.

Borrowing Against the Value of Your Degree
The Education Resources Information Center reports Census Bureau findings that by earning a two-year degree, you can earn nearly $500,000 more during your working life than you would with only a high school diploma. Complete your four-year degree and lifelong earnings nearly double beyond the level you’d earn with only a diploma.

In response to the current economic slowdown, the government adjusted the Federal Student Loan Terms (starting July 1, 2009), enabling many student loan borrowers to arrange payments based on income. New caps on payments are established based on income and family size, and some debts can be reduced or forgiven by post-graduate employment with non-profit, government, or public service agencies.

It’s best to calculate how much you’ll need to afford your current schooling. Consider the regulations for repayment, and your future earning power, too. By making well considered decisions to borrow only the money you need–as opposed to financing new cars or consumer goods while at school–you can better your chances of your degree’s value and earning power balancing out your debt.

Publish date: August 11, 2009