Today’s college education costs A LOT! Most everyone has to borrow something to cover all the expenses. The big question is - When do you stop? When is the amount you borrow no longer worth it in your future? What is practical in the long run? – well, several questions there, but they amount to the same thing. You and/or your parents should not just borrow blindly or to fulfill a wish. You and they have to be reasonable and protect yours and their futures.

Borrowing Pitfalls

Borrowed money is not easily written off. It used to be you could declare bankruptcy to reduce the amount of college loans you have to pay back. That loop hole has disappeared. Now you have to prove you can not live a minimal existence if you continue paying for your loan. Month by month payments are not exorbitant, so it would be hard to prove you could not live while paying it. Of course, you can not live in a decent apartment, par for a decent car, or have any entertainment costs.

Interest rates have gone up. Stafford loan rates were at 5.3 %. Now for existing loans they interests rate has gone up to 7.14%, for new loans the interest has gone up to 6.8%. If you were to borrow $10,000 today you would be paying $5,000 plus more than before.

Credit cards will kill you. If you think you can cover extra cost beyond your loan by charging it to your credit card, you are right, but that kind of debt is strangling. If new parents were to borrow $5,000 with their credit card to prepare a room in their house for a new baby and only paid the minimum balance, their child would be 32 before the loan was paid off. Imagine what putting a couple thousand dollars on your credit card each school year could do to you!

Starting salaries can not put a dent in your debt, but your college debt will put a dent in your staring salary. Think about it. If you have a debt of $60,000 when you graduate from college, how could you possibly make it on a $60,000 starting salary? And, $60,000 a better than average starting salary! For every dollar of loan, your have at least a dollar less for daily essentials such as food and rent, a dollar less for your retirement savings, a dollar less to put toward purchases or recreation you might like—and it may be more than a dollar less if you calculate the interest you own on that dollar you have borrowed.

What Can You Do?

According to 2006 figures, the average private college will cost a student $88,872. The average cost of a public school is $23,344. How can you pay for that?

First make wise choices. Maybe a public school will offer a fine education. Maybe you should graduate from college debt free so that you can attend a good graduate school, as your graduate degree will be more important than an undergraduate degree. Also, make sure you apply for scholarships and grants. Of course scholarships do not have to be paid back, but also grant loans do not have to be paid back.

If you have to borrow, borrow smart. When you look for loans, shop around. All lenders want you to borrow; they make money that way. Check with the financial aid office at the colleges you apply to. They can off you a list of their preferred lenders--preferred because they do not gouge. BUDGET before you even start. Sit down with your parents and consider what your starting salary might be for the career you think you are preparing for in college. On line resources can help you find the average salaries for many jobs. Then calculate what debt you can afford. Your college loan and any other debt you might have upon graduating (car loan, credit card, etc.) should be less than 1/3 your starting salary. This exercise should give you an idea of what you can afford, what will be worth borrowing. Be practical. Education is important, but its costs should not prevent you from living a better life afterwards. An education is available in many ways that are affordable.