Everyone probably has the occasional flashback to a regrettable moment in college. Beer can usually be identified as one of the culprits, and photographic evidence may or may not still be in existence.
The current crop of recent college graduates has a big item to add to their list of regrets -- too much debt. In many cases, it's not just school loans but also a big pile of credit card debt accumulated during years when they had little or no income.
USA Today recently did an illuminating series about what it's like to be young and in debt. They profiled a number of recent college grads and asked financial planners help them sort out their problems. You can read more about the series here.
In a follow-up, the newspaper polled some of the many young people who had asked for help when the paper first contemplated the stories. Already older and wiser, these recent graduates offered some advice for young people heading into college.
Monitor spending. Many recent graduates lamented the massive credit card bills they accumulated during their collegiate years. Some debt, for school-related expenses, may be unavoidable. Trying to keep up with fellow classmates, whose families can afford to fund their extracurricular spending, may drive some students into a lot more debt than necessary. It's also easy for collegiates to get used to the more lavish lifestyle they can afford by purchasing with plastic.
Attend a cheaper school. Very few collegiates said they would trade their high-priced education for a lower-priced one, but some said they would. Some students felt a better-known private school could give them an advantage later. Others said they felt their school debt held them back.
Pick the right major. While many students were happy with their course of study, some said they wished they'd chosen to prepare for a more lucrative career.
Understand your loan options. Read the fine print, and learn the differences between federal and private loans. Although school loans may be necessary, about a third of the students and graduates polled said they wished they had paid closer attention to the terms of their loans.
If you know you'll be exiting college with a pile of loans, enter this once-in-a-lifetime experience with the mindset to minimize your debt. You will not want to spend the rest of your 20s paying for a lavish lifestyle -- one that you could afford now, if only you didn't have those credit card balances hanging over your head.
That means considering your options for making your time at college less expensive and your time after school more lucrative.
- Avoid credit cards. Figure out some way to cover your day-to-day expenses that will not require you to spend years paying off your late-night coffee, your beer, and your trendy outfits. That may mean taking on a part-time job while in school, working full-time during the summer, or both. Try to minimize the amount of day-to-day living expenses paid for with borrowed money.
- Compare schools wisely. If you know exactly what you want to study, do a lot of research. You might find the best program is not found at an expensive private school but at a more reasonable state school. Or, think about attending a community college for two years and transferring. You can still graduate from a well-known school but cut your costs dramatically by only paying for two years of that school's tuition.
- Think about your earning power after graduation. College is a great time to be idealistic. It's easier to be idealistic after college if you don't have to pay for school loans. If you know you're headed for a career that isn't that lucrative, think seriously about attending a more affordable school.
- Apply for financial aid and study your loan options carefully. Know the terms of the loans you take and your responsibilities to pay them back. Understand them fully going in and you'll be more prepared to deal with them when you finally graduate.
If you're a parent of younger children, you can help them avoid some of their debt load by educating them early about credit cards and financial responsibility. You also have a lot of options if you want to start saving for their college costs. Take a look at the College Savings Center to find out more.