U.S. News released its 2016 Best Colleges rankings last week. And just this past weekend, President Barack Obama unveiled an updated College Scorecard to help students and families research and compare higher education institutions across the country.
If you’re a prospective college student — or the parent of a prospective college student — you’re likely dreaming of spending four years of your life at one of these schools.
The Student Loan Ranger encourages you to follow that dream. But you may have to amend it slightly. That’s because you may not be spending four years of your life in school — you may be spending five or six years in school. That’s because not all students graduate college within four years. Some may take five or six years — or longer — to finish an undergraduate degree.
And while many students likely wouldn’t mind spending another year or two learning, hanging out and avoiding the “real” world, they should worry about one aspect of that extra time: the cost. The class of 2015 graduated as the most indebted ever — with an average debt level of approximately $35,000. One reason for this is that students do not realize just how long they might spend in school.
[Get exclusive tips and advice on paying for college.]
To help you avoid that fate, think about college as at least a four-year expense and figure out how you’re going to finance it over that entire period and more. Here are a few ways to do this.
1. Create a student loan plan: Before you enroll in college, plot out how much school is going to cost you over four years and then build a plan accordingly. Doing this may sound obvious, but once you’re in school it becomes too easy to focus on just paying the next tuition bill, overlooking the fact that there’s a another one after that, too.
The simplest way to do this is to look at the actual cost of a school and multiply it by four. That is the number your plan will need to account for, and if it’s large enough to scare you, remember that it’s also likely the smallest number you’ll have to pay.
Look at the amount you’ve saved to date via a 529 college savings plan or other investment vehicle and estimate how far that will get you each year.
Review your financial aid award letter. If you’ve received any scholarships, know if they are renewable or if they will leave you with a gap you’ll need to cover the next year.
What about loans? Think about how much you want to borrow, and how much will that actually cost you. Make sure you base your numbers on factors like your planned postgrad salary.
These are tough questions to wrap your head around, especially before you even step foot on campus. However, answering them will help ensure you can stay in school once you’re there, for however long it takes.
[Use these 10 tools to get a tailored college cost estimate.]
2. Don’t borrow the maximum amount — unless you need it: Each year you are in school, you will get an award letter that details what types of aid and how much of each you are eligible to receive. However, these letters are not chiseled into granite.
You can choose to accept some forms of aid like work-study, for instance, while turning down others. You also do not need to take the maximum amounts offered you.
If you’re a first-year student and your award includes the maximum $3,500 in subsidized Stafford loans, you could borrow $2,500 instead and make up the $1,000 difference elsewhere. If you don’t need those funds, don’t take them. This is where having a plan comes in handy.
Students who take out the maximum amount of loans and end up with a refund don’t always spend that extra cash in the most financially responsible ways. Of course, you don’t want to be repaying a spring break trip 10 years down the line.
Even worse, Stafford loans cap how much you can borrow. You don’t want to use up these funds on frivolous items, only to have to turn to private loans with potentially higher interest that may be less forgiving when years five and six roll around.
[Know the factors that should — and shouldn’t — affect student loan borrowing.]
3. Try to finish college faster: The average student may take five or six years to finish their undergraduate degree, but you’re not going to college to be average., Instead, change this narrative and look for ways to finish your four-year degree in less time.
If you’re still in high school, you’re likely familiar with taking AP courses and the tests that go along with them for college credit. However, these aren’t your only option for fast-forwarding your education. DSST exams and CLEP exams both may allow you to complete lower-level courses faster and at a fraction of the price. Same with enrolling concurrently at a local community college.
Before taking advantage of any of these, be sure to check with the school you plan to attend to ensure they’ll accept the credits. If they do, you’ll be ahead of the game, both academically and financially.
More from U.S. News
Public Service Loan Forgiveness: Common Questions Answered
Make a College Cost Plan to Limit Student Loans
Debunking the Student Loan Bankruptcy Myth
Think Beyond 4 Years of College When Borrowing Student Loans originally appeared on usnews.com
