A college education is good, but debt incurred by a college education is BAD. Student debt has increased due to both credit card use and college loan debt. 80% of college students have at least one credit card with an average credit card debt of $2,100, according to 2004 figures. Also, if you borrow just $5,000 per year for college over four years, your debt will be $20,000, more when you figure in the interest on your loans. The average college student debt is $21,000.
“The Student’s Guide to Personal Finance” at GoCollege.com offers some dos and don’ts for college financing. This article shows clearly how debt mushrooms and discusses more disciplined use of credit cards. Another part of the article explains the 10% rule, not borrowing more for an education that will cost more monthly to repay than 10% of your future earnings. It also offers a good way to project that money debt payment based on each $1,000 dollars borrowed. The article goes on to compare the efficacy of using federal and subsidized loans versus private loans and takes you through the process of applying for better loans, including the FAFSA application and the CSS Profile.
CB recommends this article. It has all kinds of reasonable thinking about managing money and lots of tips for getting an education with manageable debt. You may also want to read through the many informative articles at CollegeBasics in the Paying for College section, especially the article “Is Your College Education Worth Huge Financial Debt?”