Imagine this, a student walking across the stage at graduation with a freshly printed Bachelor's Degree in hand. Feeling a sense of pride and satisfaction. Seeing their Dad waiving and Mom standing with a tear of joy in her eye, both so proud of their college graduate. “I did it!” runs through their mind. All the hard work has finally paid off...... Now the overwhelming reality of debt overtakes, leaving them with the question, how do I pay for it?
When it comes to funding college education there is not a one size fits all formula. When do we start saving? How much do we need to save? Is the student eligible for grants and scholarships? Are parents/loved ones helping fund their education? Are Student Loans an option? These are all extremely valuable questions that can greatly affect a student and their wellbeing. According to Money Magazine, the amount of debt a graduate has can affect not only their financial management skills but also their sense of purpose and even their quality of health.
Studies have shown, as published in Gallup Magazine, that students who graduate with less than $25,000 in student debt rank 15 percentage points higher than those with $50,000 or more of student debt when “managing their economic life to reduce stress and increase security.” Even worse, the same article states,"...debt is known to have negative ripple effects that might not disappear once the financial obligation does." The study also showed a large gap in areas of Sense of Purpose and Physical Health. Excessive amounts of debt can affect not only a graduate’s mental ability to enjoy daily tasks and achieve goals but also their physical ability by reducing the energy or quality of health needed to reach maximum potential.
As you can see, the excitement from graduation can wear off quickly when they step out into the "Real World." There are many things to consider when preparing for educational expenses. Perhaps the most important factor to a successful college experience is planning ahead. This is one issue we cannot place enough emphasis on. According to CNN's College Cost Calculator, annual costs for Texas Tech University, Texas A&M University, and Tarleton State University average $23,477 per year. This includes in-state tuition, room & board, and average fees. You can see how quickly debt can accumulate without a clear plan prior to beginning the undergraduate experience.
One step to help enjoy and take full advantage of the college experience is to budget for college savings as early as you can to help offset expenses. T.T. Munger shared, “The habit of saving is itself an education; it fosters every virtue, teaches self-denial, cultivates the sense of order, trains to forethought, and so broadens the mind.” Another important piece while planning for college is to choose a school within your budget. If the student has to annually contribute more than $9,000 from loans and work in addition to plans currently in place you may to consider a less expensive option. Kalman Chaney shares, “there is importance of having skin in the game but not sacrificing your entire future.”
If the student is already in college, part time work can be very beneficial. According to Money Magazine’s report containing Federal Education data, students who work during through their college years on average earn better grades than those students who do not work at all. Adding a few hours of work per week can create discipline in scheduling, create additional cash flow, and help keep the student active.
When considering the possible negative side effects of excessive student debt, planning early for college can be life changing. Not only are there possibilities to graduate with a thriving sense of purpose, but also better health and increased financial security. When paired with the college education, stepping stones are created for a successful future.