There is one big question every student considering online college needs to ask themselves: Will my student loan debt be manageable against the final amount of an online degree? Statistics show nearly half of all students with an online college degree end up with unmanageable student debt. You do not want to be a part of this statistic.
Experts in the financial industry agree that it is possible for students to safely incur a small amount of college debt and end up with a quality education.
How Much to Borrow?
The amount of debt for an online student depends on several components. If the student has a family to support, a mortgage payment to make or current debt that needs to be paid off are all considerations when determining the amount of debt for online college. Other considerations include: how high are the existing loan payments, how long will the degree take to complete, what is the job market for the degree earned and what is the average salary for that particular field?
The rule of thumb is: Do not spend more than five percent of the salary expected on a student loan. A student should determine how much to borrow based on the lowest end of their expected salary. A good calculator to crunch the numbers can be found at FinAid. There is a standard within the industry of what is considered “unmanageable” and it is close to eight percent, according to financial experts. Borrow only what you need, not the full amount that is offered.
What Type of Loan?
In general, it is advised for students to steer clear of private loans. Lower interest rates can be found with government student loans and they offer more flexible payment options. Many government student loan programs will offer to cancel or defer payments if the student enters a certain field or is on active military duty. Mark Rodgers with CitiBank states that the CitiAssist program allows students to repay the debt at a slower rate or suspend payment for extenuating circumstances.
Consider Debt Carefully
Taking on college loan debt will only be worth it if your degree increases your ability to make more money. When choosing an online college, only choose an accredited online college where your degree will be recognized and credits can be transferred, if needed. Beware of false claims from some unaccredited institutions.
A good place to start when determining if a certain degree or program is worth the cost is to ask your employer or potential employer if they would recommend pursuing that degree or program. Ask if it would be beneficial for career advancement.
Make Good Decisions
There are a couple of factors that make it difficult to make good decisions about taking out a student loan.
Sometimes private lenders have misleading ads about borrowing large sums without applying for financial aid. However, students will find the government-backed loans will offer better terms.
Students may feel a lot of pressure to enroll from an admissions officer. These admission officers need to fill spots and have very little regard for a person’s financial status. Take time to research all of your options. The right online college will wait for you.
Most online schools do not have financial counseling. Seek out help from a trusted source before you agree to college debt.
The main question to ask yourself: Will my online degree be worth the student loan debt incurred? Weigh your options then act accordingly.