Are you setting yourself up for debt?

I’ve harped on the importance of filing a FAFSA in my last few blog posts, but Bankrate.com’s team reminded me of another source of trouble students face when it comes to paying for college. The number two mistake they list: Choosing a school that costs too much.

“You have to look at two cost comparison points — how much is the cost minus gift aid such as grants and scholarships, then how much is the total cost with loans,” says Tally Hart, senior adviser of economic access at Ohio State University. “Compare the total debt you will have to take on to graduate from each school.”

It’s important to do a real apples-to-apples cost calculation of all the colleges [...] This comparison isn’t as simple as deducting the financial aid package from the school’s sticker price because the aid package usually includes student loans.

The true price of paying for college is what you’re paying now plus the debt you must take on over the four or five years until graduation, Hart says.

There are plenty of people out there who may assume they do not qualify for financial aid, but this advice from Bankrate addresses the other side of the coin – those people who do not think long-term about their college choice and the debt they may face once they graduate.

student loan debtHere’s my soapbox: When shopping for your college education, it’s essential that students today think about the industry they are going to go in to and the income level they should expect to be in with an entry-level job. It makes no sense to accept the burden of loans just because you don’t have to think about it for 2-4 years. You wouldn’t buy a house without figuring it into your existing budget, and you shouldn’t invest in a college education without doing the same. If you can’t go to a certain college without taking on a drowning debt, then that particular college shouldn’t be on your list.

Do your research, and keep in mind that few industries are “safe” (i.e. not every industry will flourish all the time; our economy has taught us that over the last two years). Be realistic about the salary you can expect by looking at sites like Salary.com and PayScale, which offer you income averages for your geographic location and the level of employment.

Have you reconsidered entering a certain industry because of the long-term debt you might face after earning your degree? Or have you reconsidered your choice of college because you knew it wasn’t good for you financially in the long run?

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