I am watching the Suze Orman Show and a call comes in from a NYU dental student approaching graduation. She shares that she has $450,000 in student loan debt and asks Suze how she will pay this debt back. Nearly everyday in my work I see people as a financial coach who have too much student loan debt, are often taking on more debt, and are having trouble meeting their financial obligations including student loan debt. I offer the following observations and cautions:
- Approach educational opportunities and the financing of same carefully.
- Understand what the financial outcomes of students in the program you are entering have been. What do people earn, how long before they are able to get desired job, etc. Be a smart school and school financing shopper.
- Consider if the program of study is within your means and are likely to produce good outcomes for you.
- Be particularly careful about private for profit education institutions including online institutions. The cost of these programs tends to be high, the student loan default is much higher than non-profit or public schools.
- Understand that it is very difficult to ever place federal or private student loan debt in bankruptcy.
- Treat the decision to attend a particular school and program, and in considering student loans, as carefully as weighing a choice of spending limited money in your bank account or wallet. For many, the use of other people's money (OPM) can be much easier to spend than your own. This is a major mistake.
- Note, I believe in the power of education. I believe well chosen career paths, well chosen schools, well chosen education funding options are in your best interests. Any shortcoming in these choices can be and will be dangerous to your financial and emotional well-being long-term. Life is always about making good choices. Making the right choices for you and your life circumstance.
- Remember some professions including teaching, social work, and others offer the potential to have student loan debt forgiven after working in a field for ten or more years and paying on your student loan debt during this period.
- Look into consolidating federal student loan debt, and exploring Income - Based Repayment Plans if applicable.
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