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How to Pick the Best College for You without Jeopardizing Your Financial Future

Updated: Apr 30


It used to be a lot easier to pick the best college for ourselves. We studied for and took the college entrance exams. We then applied to all the colleges we wanted. Then we waited for the acceptance letters. Finally, we laid out all the acceptance letters onto the dining room table and picked the college we wanted. Done!

Yes, that was a long time ago. That was a time when both public and private nonprofit colleges were deemed affordable. So, money wasn’t a huge consideration or obstacle back then. Today, paying for four years of college can feel like buying a condo or starter home. According to data published by the National Center for Education Statistics (NCES), the average cost of a 4-year private nonprofit college including room and board for the 2021-2022 academic year is $55,800. Yikes! For a 4-year public institution, it was $26,000. Half the price but still not a bargain.

So how do students like you afford college? Well, you’ll be taught that practically every college is affordable because you can take out all the student loans you need to cover your freshman, sophomore, junior and senior years. You’ll be taught that taking out student loans is normal and that everyone does it. You’ll be told that getting student loans is an easy process and it really is. Lenders want you to take out loans because they want you to pay them back with interest. And to be certain that they get their money back with interest, lenders will often require your parents or guardians to co-sign for you. So now they’re legally on the hook as well! The hard part will be paying it all back with interest. For many grads, this payback period will be a long painful experience shared by you and whoever agreed to co-sign your loans.

Millions of college grads are already saddled with student loan debt. According to data by Federal Reserve Economic Data, all the current student loans total about $1.7T (trillion). Many of them can’t qualify for a 30-year fixed rate mortgage on their first home because their student loan debt caused them to exceed the mortgage lender’s debt-to-income (DTI) ratio limit. Many of them can’t get a car loan because of their student loan debt. An alarming number of college grads have already become resentful and depressed regarding their economic situation and that’s largely due to their massive student loan debt. This “National Student Loan Debt Crisis” is not a club you want to join!
So How do I avoid the Student Loan Debt Trap?

If you and/or your parents (herein referred to as “you”) can pay for your 4-year college education without taking out any student loan or tapping anyone’s retirement savings in a way that puts their retirement at risk, then the best college for you is whatever college you want amongst the institutions that accepted you. It’s that easy. But if you don’t have enough money to pay for college in full and need to take out student loans, you should seriously consider picking a college that gives you the best education without forcing you to take on so much student loan debt that it takes more than 3 years to completely pay off. Some financial coaches would even suggest completing your 4-year college degree without any student loan debt. But we know that’s probably not reality for many college-bound students.

From a financial point of view, we believe it’s reasonable to take on a “small amount” of student loan debt if that’s what it takes to get your 4-year degree. Be warned, though, that taking on a “large amount” of student loan debt can weigh you down or even cripple you for many years, sometimes for decades. Can you imagine taking 10 to 30 years of your life to pay off your student loans?

There’s no universal method to determine what is a “small amount” versus a “large amount” of student loan debt. It depends on a number of factors including, but not limited to, total amount of loan principal, loan interest rate, living expenses, personal net income. It’s also subjective because everyone’s risk tolerance is different. You may not want to spend the next 10-30 years of your life paying off your student loans while some of your friends may be ok spending their entire adult life paying for it. At the end of the day, only you can decide what is acceptable because you're the one who will end up bearing the consequences of your decision.

Our bottom-line advice is this – Try REALLY HARD to complete your 4-year college education with little to no student loan debt. And when we say “little” we mean an amount that takes no more than 3 years to completely pay off. If it takes you longer, or worse, significantly longer, then you should reconsider your choice of college. Unless you really don't mind joining the “National Student Loan Debt Crisis” club and you're ok going through the same miserable experience as millions of college grads before you.


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