Blame it on the feeble job market. Or the massive student debt loads. Or both.
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According to a recent survey by COUNTRY Financial Security Index, the number of adults who think college is a good investment dropped to 57%, down from 81% in 2008.
Although students are seeing their peers struggle to find employment post-graduation, the rising cost of college is also de-valuing a degree’s worth, says Joe Buhrmann, manager of financial security support at COUNTRY Financial Security Index.
“You look at the average cost of a public university at more than $20,000 a year and the average cost of a private institution is $40,000 a year and people are really starting to take a second look at that,” he says.
Despite the drop in perceived value, students are more tolerant to taking on higher loan amounts, with 42% of those surveyed saying more than $20,000 is an acceptable amount of student loan debt to take on in pursuit of a college degree.
“If you’re taking on an $800 to $1,000 a month debt payment for 10 years, 15 or 20 years, or a 25 year loan option, that’s half your life by the time you finish paying just to get your undergraduate degree,” says Mark Maiewski, certified college planning specialist and founder of StopOverPayingForCollege.
What’s more a recent study by student loan giant Sallie Mae shows students now footing more of the tuition bill. Here are four tips to lessen the debt load:
Calculate the True Cost
Don’t let the initial sticker price of a school take it out of the list of considerations.
“When you look at that bottom line net cost, you might find that a school that you had written off the books as being too high in tuition and room and board expenses might actually be cheaper than some of the other schools that you were considering,” says Buhrmann.
Students and their families should use a net cost calculator to estimate what kinds of scholarships or financial aid students are eligible for that may reduce the cost.
For students who are hesitant to commit to a pricey four-year college right after high school graduation, Maiewski recommends looking into community colleges with transfer options.
Exhaust All “Free” Aid Resources
Locating sources for “free” aid is crucial in keeping debt to a minimum, says Suzanna de Baca, vice president of wealth strategies for Ameriprise Financial.
“Make it your full-time job to apply for scholarships you’re eligible for, and look into work-study programs or other part-time jobs,” she says.
Students should also understand the types of loans that are available to them and what is best for their financial situation, says de Baca. Check out sites like the U.S. Department of Education’s Federal Student Aid site to learn more about different loan options.
Don’t Pay for Every College Credit
Students can cut serious costs by performing well on tests, starting with SAT and ACT scores, says Maiewski.
“[Applying] to private schools with good test scores and GPA can get you a significant tuition discount—we’re talking thousands of dollars and sometimes tens of thousands of dollars if you do well on scores,” he says.
Students who also score high enough on Advanced Placement (AP) course or College-Level Examination Program (CLEP) exams can test out of college courses.
“If you take AP or dual enrollment classes and if you get an exam grade that is equal to getting a college credit at that particular school, that saves you three credit hours, which is roughly $1,000 towards your tuition for the year and at a private school, that could be $3000,” says Maiewski.
Pay Down Debt While Still in School
To keep post-graduation debt more manageable and cut down on the amount of interest students will pay, it’s beneficial to contribute towards repayment while still in school, says Buhrmann.
“I think even small amounts chipped away at a deliberate pace can help you manage that student debt, whether it’s a part time job you take on, summer work, a paid internship, anything you can do to minimize debt that puts more money in your pocket and helps you be more financially secure when you get out of school,” he says.
Maiweski, whose daughter completed a work study program while in school which allowed her to pay for text books and other expenses, says that working students tend to be more conscious about the cost of their education.
“If a student has skin in the game one way or another, whether they’re working to pay for their personal expenses, for books, or whatever it may be, that makes it more meaningful to them.”