The point of college is to help you build the foundation for a good future. So when you hear that the school you choose also needs to be in a price range you can afford, that can feel like a limitation. But let’s face it. If you’re looking to the future, there’s much more to your life than the next four years. And how much of your future income do you want to give up in order to pay off your student loans?
Yes, you may find the realities of yours or your family’s income may require you to look at other options than just your “dream school.” But setting aside that short-term desire could lead to some long-term benefits. And it could definitely help you avoid the student loan crisis that’s affecting so many people today.
To help make the point, let’s look at two similar students: Jordan and Casey.
A tale of two students
Jordan and Casey are two friends who have the same “dream school.”
Jordan receives her acceptance letters from her favorite school and is very excited. However, she learns she will need to borrow $10,000 a year in loans to attend. If the interest rate for those loans is 6.5%, it could cost her $454 a month for ten years after graduation to pay it all back. That could make the difference between her affording a car or not, having her own place versus having to still live at home after she graduates, or some other major lifestyle choice.
When Casey gets her acceptance and sees that her first choice means she’ll have to borrow $10,000 per year, she decides to go with her second choice school, one that will only require her to borrow $5,000 in student loans per year, because paying that amount back will cost $222 a month after graduation. Casey may prefer the more expensive school, but she believes her future will be better if she doesn’t have to carry so much debt.
Unless you have a lot of money in savings or are able to receive a good amount in scholarships, there’s a good chance you’ll have to face a decision like Jordan and Casey. College Money Matters can’t tell you what the right decision is for you, but we strongly suggest that you “do the math” and give it some thought.
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