More than 2/3 of college students borrow to pay for school, but up to 20% borrow excessively and can't repay their loans with the salaries they earn. "Excessive" is defined as having monthly payments that exceed 10% of gross income.
According to a study published in March by the Institute for Higher Education Policy, 41% of college borrowers who began repaying their loans in 2005 had defaulted on their loans within five years. They incurred heavy penalties, which led to owing more money on the original loans.
Financial aid experts recommend ways to get a degree and keep debt down:
• Choose a less expensive college than your dream college.
• Start out in community college and transfer to a four-year college later.
• Consider state schools instead of private schools.
• Keep loans to less than 10% of income.
• Choose a degree in a growing field.
Something important to remember: Repayments kick in regardless of whether a student leaves school with a degree.
Adapted from Time, October 25, 2011
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