If you must get a stuget a loandent loan, find a fixed rate

A postcard from student loan matchmaker MyRichUncle.com recently showed up in my mailbox, addressed to my brother — who graduated in the spring of 2008.MyRichUncle.com announced that it had stopped making loans late last year, making the postcard even more curious. Or perhaps less curious. Is it really shocking that a student lender company who sent marketing material to people who had already graduated after it stopped making loans ended up going out of business?But anyway, there’s still something of value to be gleaned from the mailing. The postcard brags that “Our conflict-free private loans start as low as 8.79% APR. * Ah, the good old *” Apparently the phrase The good old was put in place to remind my brother that “The interest rate is variable and may increase or decrease based on the 3-Month LIBOR.”The 3-Month LIBOR? What percentage of college students even know what that is? And what kind of rich uncle lends money based on the 3-Month Libor? Uncle Ebenezer Scrooge?If you or someone you know is shopping for student loans right now, it’s extremely important to avoid the variable rate variety. Interest rates are at record lows and most experts agree that they will spike upward quite a bit because of inflationary pressures. Just as homebuyers are almost universally opting for fixed-rate mortgages right now, so too should student borrowers. Best of all, you’ll know what your monthly payments will be when you graduate. With variable-rate loans, you’re really just guessing.

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Graduates Keep Struggling With Private Sthome loan calculaterudent Loans

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student loans college debt private
Gerald Herber/AP

Student loans have become an increasingly large portion of the debt burden that Americans face. During the past six years, consumers have paid down their outstanding balances on most forms of debt, including mortgages, credit cards and auto loans, according to the New York Federal Reserve.But student loan balances have continued to increase. The Consumer Financial Protection Bureau noted earlier this year that outstanding student debt would shortly hit the $1.2 trillion mark.Most of the loans that students take are federal government loans, with various features that can include subsidies for interest payments while you’re in school, fixed interest rates throughout the life of your loan, and opportunities for deferments, forbearance, and even outright loan forgiveness under certain circumstances.But even though private student loans represent a small portion of the overall loan market — about 14 percent, according to figures from the CFPB — the lenders that offer private loans have gotten a number of complaints from borrowers citing various problems.Let’s take a look at the CFPB report that goes through types of trouble borrowers have had recently with their student lenders to find some key conclusions.1. Lenders Want Your Business.For the most part, few borrowers cited any problems with actually getting a private student loan. Just 4 percent of the complaints to the CFPB had to do with obtaining loans, strongly suggesting that most of those who need financing aren’t having banks turn them away.Lenders have good reasons to prefer student loans. Unlike most other forms of debt, student loans give creditors protection against discharge in bankruptcy, meaning that borrowers often have to repay their student debt even if they go bankrupt and have other debts wiped out.2. Competition Is Limited.Looking at which lenders got the most complaints, Sallie Mae (SLM) was the winner by far, with nearly 800 complaints representing almost 40 percent of the total complaints received during the report’s six-month scope. That’s more than four times what the No. 2 lender received. Wells Fargo (WFC) and Discover Financial (DFS) also had more than 100 complaints each.These numbers reflect just how concentrated the market is for private student loans. Only a small number of lenders control a large portion of the industry’s overall market share, according to the report.3. Repayment Problems Are Paramount.The largest group of borrowers’ complaints focused on the inability to get their lenders to agree to modifications of their loan terms. Unlike federal loans, many of which have built-in safeguards aimed at helping those in need avoid complete default, private loan borrowers often lack the right to reduce monthly payments when they’re under financial stress. Moreover, some borrowers argue that their lenders haven’t given them more favorable terms, such as lower interest rates, once they’ve built up a more favorable credit history than they had when they first took out their loans.In addition, some complaints focused on payment processing that created additional fees.For instance, when borrowers paid only a portion of the amount due on their loans, some lenders divided up the underpaid amount equally across each individual outstanding loan, resulting in far more fees than if the lender had used the payment to cover as many minimum payments as possible.Even borrowers who were able to repay their loans on time, in full, and according to their original terms had some troubles. Difficulty in having payments on multiple loans accurately applied to each required payment resulted in many complaints. In particular, when borrowers made payments that were above the minimum required monthly amount, lenders sometimes failed to apply the extra amount in the way that was most advantageous to the borrower.Moreover, promises from lenders that co-signers would be taken off loans after a certain number of payments weren’t always kept, with modifications to policies having been made in some cases even after students got the loan.Be Careful With Private LoansThese problems are just a few of the reasons why private student loans should generally be your last resort when it comes to financing a college education. With unattractive terms that usually make these loans more costly, the complaints about private lenders merely add insult to the injury of having to go into debt for education in the first place.You can follow Motley Fool contributor Dan Caplinger on Twitter @DanCaplinger or on Google Plus. He owns warrants on Wells Fargo. The Motley Fool recommends Wells Fargo. The Motley Fool owns shares of Wells Fargo.

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Averagsba loan requirementse Student Debt Hits Record High in 2010: $25,250

Average Student Debt Hits Record High in 2010: $25,250 A report released on Thursday by the Institute for College Access & Success’s Project on Student Debt shows that members of the class of 2010 who took out loans to finance their educations owed an average of $25,250 in student debt at graduation — a 5% increase from the year before.The data were compiled from more than 1,000 colleges — half the country’s public and private nonprofit four-year schools. According to the report, only five out of 471 for-profit colleges reported student debt data for their 2010 graduates. Had profit-making schools been included, The New York Times reports, the “average amount of debt would be even higher,” since at these colleges, “almost all students take out loans and, according to federal data, borrow about 45 percent more than students at nonprofits.”The report blamed difficult economic conditions and increasing costs of tuition for the record level of student indebtedness: “Most students in the Class of 2010 started college before the recent economic downturn, but the economy soured while they were still in school, widening the gap between rising college costs and what students and their parents could afford.” The report did not include loans taken out by parents in its calculations.In all, about two-thirds of seniors graduating in 2010 carried student debt. The class of 2010 “also faced the highest unemployment rate for young college graduates in recent history at 9.1%,” the Institute noted in its press release.

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Trick or Treat, the Personal Finance Ediblackhorse loanstion: Sweet Deals and Scary Mistakes

Trick or Treat, the Personal Finance Edition: Sweet Deals and Scary Mistakes The world of personal finance is a lot like Halloween: Filled with treats if you’re good (and clever), but rife with tricks if you’re not careful. Below we offer you some savvy advice that will keep you from getting your money tree TPed, and help you bring home a pumpkin full of sweet rewards.Student Loans Treat: If a reasonably sized student loan makes going to college possible, it’s surely a good thing. Better still, if you can get a loan backed by the government with a low interest rate and the luxury of not having to pay it back until you get your first post-grad job. Trick: As with candy, there can definitely be too much of a good thing when it comes to these loans. “If you take out more than you can handle, or take out more than you need, it can be a trap,” says Derrick Kinney, a financial adviser with Derrick Kinney & Associates. If you need to go deep into the red to attend a certain college or university, it may be the wrong one for you. Pick a university that won’t drown you in debt. It can also help to figure out the real cost of going to a given college in advance. Also, be wary of high-interest rate loans.Credit CardsTreat: If you charge only what you can pay off each month, the convenience of a credit card can be sweet. Up the treat factor too, with cards that offer rewards and cash back programs.Trick: If you carry a balance that just grows and grows, you’re putting yourself in a scary position. “The amount of interest you pay will almost always be greater than the value of your rewards,” says Kinney. And large outstanding balances and late payments can damage your credit score. Outlet MallsTreat: If you get quality merchandise at genuine bargain prices, you’re in the right spirit. Trick: Often, there’s much less to the great deals than meets the eye. “Original” prices are bumped up on the tags, making the discounts seem greater. “Watch out for buying outlet quality products at only slightly lower cost than retail,” warns Kinney. Have a good handle on what really constitutes a “good deal.” And look closely at quality: There’s often a good reason those items aren’t selling at full price elsewhere. Finally, don’t let the magic of “sale” signs enchant you lest you end up spending a lot more than you planned to for items you don’t need.401(k) LoansTreat: If you need cash quickly and have no other options, borrowing from your 401(k) can be a hassle-free way to get it. You’re borrowing from yourself, so there’s not even a credit checkTrick: These deals can go sour fast if you don’t have a clear plan to pay yourself back. Moreover, even when you have a plan, the unexpected can happen, especially in this unpredictable economy. “If you’re laid off or leave the company [that sponsors the 401(k) plan], the loan is due immediately, or is considered a distribution which results in taxable income and possibly penalties,” says Michele Day, a certified public accountant and personal finance coach.Tax-Deferred InvestmentsTreat: Invest pretax cash now, make a profit, and pay the IRS their share later, when you’re hopefully in a lower tax bracket.Trick: You might not end up in a lower tax bracket later, especially if rates rise across the board. “Americans love to defer their taxes. But, if you’re successful in growing your nest-egg and tax rates go up long term — as seems likely — you’re only going to pay higher taxes on a bigger number,” predicts Yellen.3 Deals that Look Like Treats, but Are Usually Tricks• Investment TipsYou know somebody who knows somebody who really knows what they’re talking about when it comes to investing. They offer to share “inside” info with you that promises big returns.But why would they do such a thing? “More likely, it’s a trick. Do your homework and don’t rush into investments,” says Mackey McNeill, CPA and personal financial specialist with Mackey Advisors. • Zero-Interest DealsWhether it is furniture, a mattress or whatever, any time something is being hawked at zero down, no payment and no interest for one or two years, the terms get your attention. And “free for now” can be easy on your budget, especially if it’s for a necessity.”There is no such thing as a free lunch,” says Pamela Yellen, author of Bank on Yourself: The Life-Changing Secret to Growing and Protecting Your Financial Future. The cost of the lowered interest is almost always factored into the purchase price. Always try first to negotiate the lowest price break you can get in lieu of a low or zero interest rate,”• Balance Transfer DealsThose offers can seem like a godsend — a zero or 1% or 2% interest rate on credit card balance transfers for a specified period of time. Says Day, “That 4%-5% upfront transaction fee can take all the fun out of it.”

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Csbi home loanitigroup May Sell Student Loan Corp. to Sallie Mae Consortium

Citigroup (C) plans to sell its student-lending unit Student Loan Corp. to a consortium including Sallie Mae as early as today, The New York Post reported. Citigroup owns 80% of the company, with another 20% being publicly traded. It is the country’s second-largest student lender, after Sallie Mae. The deal could see Sallie Mae and another company offer as much as $600 million to purchase the lender, The New York Post said without naming its sources. Still, the deal “could still fall apart,” The New York Post reported. Student Loan Corp. had a market capitalization of about $423 million at the close of trading yesterday. Its assets consist of a private student-lending portfolio and a government-guarantee portfolio worth about $40 billion. The consortium are interested in splitting up the portfolio, with Sallie Mae taking the government portfolio. Citigroup could keep any assets that buyers are not interested in. Citigroup and Sallie Mae both declined to comment to The New York Post.

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If You Can’t Afford Your Old Student Lpayday loan lenderoans, Why Would You Borrow More?

Student Loans, College and BankruptcyOn the Today Show‘s Money 911 segment Wednesday, a caller explained that she had filed for bankruptcy — but was unable to escape from her student loans because students loans are generally not dischargeable in bankruptcy.She then asked how her bankruptcy would affect her eligibility to get more student loans in the future.The short answer is that bankruptcy doesn’t generally affect eligibility for federal student loans, with the exception of programs like the PLUS loan program. As Mark Kantrowitz explains on FinAid.org, “As long as there are no delinquencies or defaults on student loans currently in repayment, the student should be eligible for additional federal student loans, regardless of any past bankruptcies. However, if some of the student’s federal student loans are in default and were not included in a bankruptcy, the student will not be able to get further federal student aid until he resolves the problem.”So the technical answer to her question is that in order to take out more student loans, she needs to get current on any loans she has now, and realize that her trashed credit will likely make her ineligible for a PLUS loan or most non-federal student loan programs.But that answer, which technically accurate, is sort of like giving a heroin addict tips on where to inject once he’s run out of unscarred skin on his arms.Here’s the non-technical answer: If you filed for bankruptcy and are behind on your student loans, it should be pretty clear that borrowing money to pay for stuff hasn’t worked out well for you in the past. Bankruptcy is a horrible thing to experience, but if you must go through it, you might as well use it as an opportunity to learn how to better manage your money. Otherwise, you could end up like Toni Braxton, who filed for her second bankruptcy earlier this month.Excessive borrowing led the caller into a financial ditch, and it’s highly unlikely that excessive borrowing will be the right path out.My advice? If you want to continue your education — and that’s a noble thing to do — find a way to do it without borrowing money. Working full-time while taking classes at night is one way to do that. Sure, it takes longer and it’s a lot of work. But when you graduate, that diploma will be yours free and clear.Zac Bissonnette’s Debt-Free U: How I Paid For An Outstanding College Education Without Loans, Scholarships, Or Mooching Off My Parents was called “best and most troubling book ever about the college admissions process” by The Washington Post.

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Millenmilitary loansnials: It’s Not Too Late to Plan for an Early Retirement

Coworkers in discussion at conference room tableGetty ImagesThe alarm buzzes. You hit snooze a few times before stumbling your way into the bathroom, wishing you could do something — anything — other than go in to work. Pasting a smile on your face and mumbling “good morning” to your coworkers, you settle into your desk for yet another day of gazing at the computer. Don’t worry, millennials; only about 50 more years until you can retire. Thanks to an average student loan debt of $23,300, our generation’s predicted retirement age has been pushed back a decade to 73.But what if your sentence didn’t have to be 50-plus years? What if you could put in your two weeks’ notice at 33 and embrace an early retirement?That’s exactly what Justin McCurry did.McCurry, 33, started his career as a transportation engineer and, at 24, decided he’d be retiring decades before his peers.He never made more than $70,000 annually, so McCurry credits his “don’t spend all you make” mentality for allowing him to walk away from employment in his thirties.”I always maxed out my 401(k) and IRA and any other tax-deferred savings plan I qualified for,” McCurry says. “I also managed to save additional funds in a brokerage account each month.”McCurry, who is married with three children, has over $1 million saved and has already paid off his home. He cites budgeting as one of the keys to successful early retirement.McCurry’s family has no debt and an annual budget of $32,000, which covers living expenses, discretionary spending, and long-term purchases, such as replacing their 13-year-old car. Details of McCurry’s budget and retirement plans can be found on his site Root of Good.McCurry attended state schools and graduated debt-free. But is retiring early doable for a millennial tens of thousands of dollars in the red?

Just because you have debt doesn’t mean you can’t retire early.

Dealing With Debt and Retiring at 35″Just because you have debt doesn’t mean you can’t retire early,” says Nate, better known by his pseudonym, Johnny Moneyseed. “It’s all about prioritization and goal-setting.”Moneyseed, 29, an active-duty Marine, started his journey to early retirement with $60,000 of debt. He is now debt-free, except for his mortgage, and on track to retire by 35.”I set a realistic goal to pay off the debt as quickly as possible,” he says, “and before I knew it, the debt was completely gone.”He and his wife save and invest around 70 percent of their income. After retirement, the couple are planning to abide by the 4 Percent Rule.”As long as 4 percent of my total portfolio value is a larger amount than what we spend annually,” he says, “then we’ll be able to live comfortably off of our portfolio forever.”His family, which includes two daughters and another child on the way, has budgeted for just $40,000 annually in order to live comfortably.Unlike McCurry, who contributes to a 529 college savings fund for his children, Moneyseed and his wife plan to have their children take financial responsibility for their college educations.”If someone would’ve covered my college costs,” he says, “I might not have ever learned how to become aggressive with paying down debt.” Moneyseed credits his debt repayment for teaching him how to be a saver.The Biggest Secret to Early Retirement Even though they’re saddled with heavy debts, millennials have one major advantage: time.”Your youth is a massive advantage. I can’t stress that enough,” says Carl, 39, a software developer who chronicles his plans for early retirement at 1500 Days to Freedom.Carl illustrates his point with a parable about two different millennials earning the historical stock market average of 10 percent a year on their investments. Millennial Mike, 25, has scraped together $25,000 in savings from his handful of years at work. Millennial Jim, 25, makes the same salary as Mike but favors luxury cars and lavish vacations. It takes Jim until he’s 29 to save $25,000.”By age 39, Mike’s nest egg has grown to $104,000,” Carl says. “And at 50, he has almost $300,000 in the bank, compared to Jim’s $70,000. At 65, Mike is worth a cool $1,100,000 compared to Jim’s $271,000.”Deciding to save — and invest — at a young age can make all the difference for millennials and those interested in seeking early retirement.”If you’re in your 20s, you have the gift of time to let your money compound,” Carl says. “Take it!”How to Make Money After the 9-to-5So if millennials can realistically plan to retire in 20 years instead of 50, might they do with their decades of free time?Kay, 38, who works in the financial services industry, believes anyone planning to retire early — like herself — needs to have a plan to generate some revenue after giving notice.”I think the earlier someone plans on retiring,” she says, “the more of a need they’ll have for supplemental income, since there’s a longer time frame over which negative events can affect their savings.”Kay plans to supplement her own income through freelance writing and her blog Green Money Stream.After retirement, Moneyseed also plans to generate extra cash by blogging, and to keep his rental properties. Carl will continue dabbling in software development, but he plans to pursue only the projects he enjoys. The already-retired McCurry participates in focus groups and research studies — when he isn’t transferring dividends from his brokerage accounts to his checking account.While early retirement — even for the indebted — is an option for millennials, one trend is clear: Anyone who plans to retire early either needs to create the next Snapchat — or be prepared to reduce their expenses to sustain and raise a family on around $40,000 a year. And picking a city with a low cost of living doesn’t hurt either.Erin Lowry writes for DailyFinance on issues relating to millennials, money and personal finance. She’s also the blogger behind Broke Millennial, where her sarcastic sense of humor entertains and educates her peers. Popular posts include:

Dear Parents, Charge Your Kids Rent Yes, You Do Need An Emergency FundBreaking Down 401(k)s and IRAs, Millennial Style

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US Consumers Upped Thstudent car loanseir Borrowing in March

credit cardsWASHINGTON (AP) – U.S. consumers swiped their credit cards more often in March and took out more loans to attend school, driving overall borrowing up by the most in more than a decade.Total consumer borrowing rose $21.4 billion in March, the Federal Reserve said Monday. That’s the seventh straight monthly increase and the largest since November 2001.A measure of auto and student loans increased by $16.2 billion. A separate gauge of mostly credit card debt rose $5.2 billion after declining in January and February.The increase pushed total borrowing up to a seasonally adjusted $2.54 trillion. That’s slightly below the all-time high of $2.58 trillion reached in July 2008, eight months after the Great Recession began.After hitting that peak, consumers cut back on borrowing sharply for more than two straight years. They began taking on more debt again in the fall of 2010 and have stepped up borrowing in recent months.The steady rise in borrowing is generally considered a good sign for the economy. It suggests consumers are more confident and comfortable taking on more debt.Analysts said stronger hiring since last fall has encouraged more Americans to borrow more.But another reason for the increase was a big surge in student loans. Paul Edelstein, director of financial economics at IHS Global Insight, said that could reflect an effort to take out loans in advance of a scheduled jump in rates this July.Cooper Howes, an economist at Barclays Capital, said he expects the trend in consumer borrowing to continue in coming months as the economy improves. Still, he said the increase in student loan debt could reflect some people are having trouble finding jobs and are opting to go back to school.”We expect that student loan growth will continue to push the level of consumer credit higher and we look for (credit card debt) to expand as banks become more willing to lend,” Howes said.The overall economy grew at an annual rate of 2.2 percent in the January-March quarter, helped by the strongest growth in consumer spending since late 2010. Consumer spending accounts for 70 percent of economic activity.Still, job growth has slowed sharply in the past two months, while wages have lagged inflation. That has raised concerns that consumers might pull back on spending later this year.Employers added just 115,000 jobs in April, the government said Friday. That followed the creation of 154,000 jobs in March. From December through February, the economy added an average of 252,000 jobs per month. The employment report also noted that the average worker’s hourly pay rose by just one penny in April. Over the past year, average hourly pay has ticked up 1.8 percent to $23.28. Inflation has been roughly 2.7 percent. Which means the average consumer isn’t keeping up with price increasesWith weaker income growth, U.S. households haves spent more while saving less. The savings rate was 3.8 percent of after-tax income in March, nearly a full percentage point below the 4.7 percent where it had been three months before. For all of 2011, the savings rate declined to 4.7 percent of after-tax income, compared to 5.3 percent in 2010.Households began borrowing less and saving more when the recession began and unemployment surged. While the expectation is that consumers are ready to resume borrowing, they are not expected to load up on debt the way they did during the housing boom of the last decade.The Federal Reserve’s borrowing report covers auto loans, student loans and credit cards. It excludes mortgages, home equity loans and other loans tied to real estate.Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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How to say no to studenhelp loant loans, yes to college and saving money

Today, Money College introduces Susan Beacham to our team. A national expert on money and family finance, she is the founder of Money Savvy Generation, which has helped more than 1 million kids get smart about spending, saving, investing and donating. Her monthly column for Money College is “The Money Savvy Parent.” Is it impossible for a child to graduate from college free and clear of debt? Nobody even talks about a “debt-free” matriculation. Most of us just assume that graduation and debt go hand-in-hand.

According to the Project on Student Debt, the average debt level for graduating seniors with student loans rose to $23,200 in 2008 – a 24% increase from $18,650 in 2004. What’s more, 67% of students graduating from four-year colleges and universities have student debt. Add to this debt load the inevitable credit card debt kids accumulate and well, it’s getting harder to defend the decision to get a college education if the price is really that high – especially in light of the grim prospects of getting a decent job once you graduate.

Many college students today who take on student debt see no way around this mess. Citing “no parental support” nor access to funding from the university they have chosen, they face only one other option – loans from Sallie Mae. “A couple of months before I moved East, I examined my finances,” writes Emily Schmitt in her story “Student Loans: A Bitter Financial Lesson.” “I had two options: first, not to go to grad school; and second, to fund most of my education with student loans. NYU ain’t cheap. My tuition runs upwards of $15,000 per semester,” she explained.Emily took out the loans. Emily felt she “had no alternatives.” Really Emily?Here’s a thought: Work and save and then go to grad school. Or, find a cheaper grad school. Admittedly this is easier advice to take when it comes to a post graduate degree – but what about college? Should kids wait if they cannot afford to go to school? Should they work and save and then attend?Like Emily, I was faced with no parental support. My parents did not go to college and the day after I graduated from high school, I was on my way to a full-time job: the kind that you get when you do not have a college degree. In other words, not great.On the way home from work about 3 months into my new job, I ran into the wife of one of my former middle school teachers. She was surprised to see me on the bus and asked why I was not at college. I had no answer. She explained that she was attending college classes on Friday night, Saturday and Sunday. This allowed her to work during the week and get her education on the weekend.I graduated from this “weekend college” three years later. I worked all week, attended classes on the weekends and then all summer so I could get done faster. I paid for college out of my paycheck. I lived at home until I graduated. Not a dime of debt. My “weekend college” was a private school to boot.I am uneasy when I read and hear kids say that they have no alternatives to taking on student debt. And I do understand that yes, colleges are more expensive today than they were a generation ago. But we, the media, have made this inevitable debt their reality. It’s nonsense. It’s the talk of a generation of kids who see college as a given – an entitlement. Well, that is just not so – never has been so – and is even less so nowadays.College is a privilege. Here is how you get this education without incurring crippling debt:You can save for it. Kids should work in high school. Consider it another sport. Except this sport pays hard cold cash. Make sure the money earned gets saved and invested so it can cover as much of the college experience as possible.

You can work while you attend a community college. Community colleges provide good, affordable education. If it really is “education” you are looking for, and you are short on funds, start there.You can try to place out of classes with some hard work in high school before you attend, thereby reducing your overall cost. My oldest submitted a writing portfolio in her senior year of high school to earn 6 credits before she even started attending class. The fee? $30. Investigate thoroughly every opportunity you have available to you to reduce your costs.You can apply for every grant and scholarship your school has to offer. Visit your high school counselor. Make your appointment no later than your junior year so you know what you will need to do to apply for this kind of financial support.If your school does not have a college resource, take a look at College Scholarships.org. This is a good place to start your search for local funding. I like this site because they list a broad array of funding opportunities without asking for information from you.Bottom line – getting a college degree does not have to include debt. There are more options than you think. To keep it as close to debt-free as possible you may have to take longer to make it happen – but in the long run, it’s worth the freedom from debt at graduation.

Susan Beacham is an award-winning children’s author, financial literacy expert and CEO of Money Savvy Generation, a financial education company that creates solutions to help kids get smart about money. Questions or comments? Susan would love to hear from you at susan@msgen.com.

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Public Colleges Lead to Monline payday loansuch Lower Student Loan Debt

Public Colleges Lead to Much Lower Student Loan DebtA friend critical of my “attend a public college to save the most money” argument recently pointed out to me data showing that, on average, private college graduates don’t really graduate with that much more debt than public college graduates.This is true. According to FinAid.org, 61.2% of grads of four-year public colleges borrow, compared with 70.5% of students who attend private, nonprofit schools. The average public college student borrowed $20,040, while the average private college student borrowed $27,535.That means students who attend private colleges borrow 37% more — but what’s $7,500 between friends?Unfortunately, those debt figures don’t tell the whole story of just how much more money parents will have to spend, on average, to send their kids to a private college.Here’s why: According to a Sallie Mae Study, parents with children attending four-year private colleges contribute $17,258 per year, compared with $7,838 at four-year public colleges. That’s a difference of $9,420.In other words, if you assumed that parents were keeping their own contributions constant at $7,838 per year, and the student was financing the rest with debt, the average student attending a private four-year college would graduate with $65,215 in debt, compared to the $20,040 in debt that would come with attending a public college.There’s more: Those public college debt figures include students attending out-of-state public colleges. If you limit those numbers to students attending their in-state public colleges, the average debt load is far lower.The corollary to that is this: Most families sending their kids to private colleges and going into debt to do it could have sent them to public colleges and allowed their kids to earn their bachelor’s degrees free and clear.The bottom line? Don’t buy into the hype that private colleges are affordable and that financial aid will make them comparable in cost to public colleges. If your kid gets into one of the most elite colleges in the country, that will often turn out to be the case. But families concerned about value and debt will generally do best by sticking with public colleges.Zac Bissonnette’s Debt-Free U: How I Paid For An Outstanding College Education Without Loans, Scholarships, Or Mooching Off My Parents was called “best and most troubling book ever about the college admissions process” by The Washington Post.

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