College: Pay Now Or Pay Later?

By Douglas Rice | August 24, 2009 AAA
College: Pay Now Or Pay Later?

With the cost of college being one of the biggest expenses in life, it's no wonder that so many students borrow money to pay for their education. Reports consistently show that the payoff, over the course of one's life, makes the degree a very worthwhile investment. If we accept that the importance of graduating can't be overstated, we then come to questions about how to pay for it. Obviously, scholarships, grants and funds from parents or relatives that don't need to be paid back are the first choice. But for most of us, work, savings and borrowing are the most feasible methods of paying for your education. (Find out which savings vehicles may be better than college saving funds for some families in Pay For A College Education With Retirement Funds.)

What Impact Will the Earnings Have?
If you are headed to an private school with the potential of a graduate degree to follow, the cost is going to be significant. So, adding four hours a week washing dishes probably won't have much impact on your financial situation. On the other hand, if you are headed to state college, and can land a gig as waiter at a high-end restaurant four nights a week raking in some serious money and eating tasty grub, then the impact will be worth it, even if it extends your academic life by a year or so.

Can You Pay it Back?
If the education you're getting is in a high demand profession at a prestigious school, your job prospects should be pretty good, even in a poor economic environment. Therefore, you'll have a good opportunity to pay back the loans in a reasonable amount of time. But far too often, a degree doesn't mean a top-tier job offer right out of the gates. It may still pay off, but job prospects for those with little experience and degrees in less popular areas of study need to be far more careful about taking on debt. (Keep the debt zombies from eating you alive; read Dawn Of The Zombie Debt.)

Where can You Work?
The best use of your time is to find a job doing work related to what you want to do upon graduation. For example, lawyers often clerk for a judge or do tasks in law offices while they go to school. If you don't know what you want to do and there aren't any decent job prospects, you might be better off borrowing more, loading up on the classes and graduating early.

Also, consider the social aspect of your education. College has an awesome networking potential and the contacts you make there will often follow you for your entire career. Don't spend time at a dead-end, low-wage job when you could be working on the college newspaper or helping a professor conduct research.

There is no easy answer here, and every situation will differ, depending on the specific factors involved. What you don't want to do is pile up debt while you figure out what you want to do. Because once you figure it out, the debt burden may be so heavy that it crushes you dreams.

Borrow wisely - you'll eventually have to pay it back. (Find out how to save thousands of dollars on tuition with the tricks and little-known programs in Pay For College Without Selling A Kidney.)

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