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Don't take on student debt just because all the kids are doing it
March 30, 2015
NEW YORK (3/31/15)--Student debt is now so common that the stigma once attached to owing tens of thousands of dollars is starting to evaporate.
In a recent interview young Hollywood actor Miles Teller admitted to having not paid off his student loans yet, and politicians from Ted Cruz to President Barack Obama have spoken about how late in life they still carried student debt (MarketWatch March 27).
More and more Americans, in fact, are not only carrying student debt into their 30s and 40s, they're taking on more of it. Student debt held by those 65 and older jumped to $18.2 billion in 2013 from $2.8 billion in 2005, according to the Government Accountability Office (TheNew York Times March 19).
Student debt isn't necessarily a trend you want to be a part of. If you're going to pursue continuing education, consider the following before you take out a loan:
See if your employer will chip in. Many employers will help pay for your graduate degree, especially if it will make you a more valuable, effective employee.
Evaluate your education as if it were an investment. Look at how much your salary is likely to increase after you complete your education--is it enough to justify the time and money you will devote to the degree? Make sure you're not overpaying for an education that won't advance your career.
Be wary of for-profit institutions. They market heavily to older Americans, and last year the Consumer Financial Protection Bureau sued one of the biggest for-profit schools, Corinthian Colleges Inc., for steering students into private loans with bad career advice and false promises of potential jobs.
Only borrow the amount you really need. When money is offered, it can be difficult to turn it down. Do some cost and income projections, and only borrow the amount you need to cover your expenses.
For related information, read "Many Colleges Can Be the 'Right Fit' for Your Student" in the Home & Family Finance Resource Center.