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How do we plan for fincances?

How much debt do you generally go into after completing your college course and how long does it take to pay off taking into consideration that you then pay for a house/apartment and a car?

college financial-planning
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david’s Answer

Hi, Jacob, I respect your concerns on the costs of education, but there are too many variables to give you a good number range. For example, the costs of a 4-yr degree vary significantly from one college to another. Also, you may have a grant or other support for part of your costs. And you may be wanting a master's or PHD or Juris Doctor, or medical degree, all of which extend your student time by several years. Then, there is the cost you select to incur for a residence and a car. All of those are variables. The good news is that, at the time that you decide to secure a loan for education, much of the information you seek will be available.
Thank you comment icon Thank you for the advice, david. Jacob
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Andrea’s Answer

Hi Jacob, great question! It is great that you are starting to think about budgeting for your education. When I was exploring careers, I researched the rough costs for degrees overall (Associate, Bachelor, Master, etc.) In addition, I looked at the areas I wanted to study. For instance, a communications major is less expensive than an architecture major, etc. Once I narrowed down what I wanted to study and how much the degree would cost, I started exploring my options in terms of financial aid. The FAFSA website: https://studentaid.gov/ is a good resource for you to explore the different types of financial aid that may be available to you. Personally, I was able to receive grants and scholarships which is money you do not have to pay back. But I also needed to take out student loans. I would recommend exploring grants and scholarships first before evaluating student loans. Student loans were my last resort but they were critical in helping me complete my education. Hope this helps!
Thank you comment icon Thank you, this is really helpful. Jacob
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Kim’s Answer

Jacob,

You are correct to be concerned, especially with the skyrocketing costs of cars and housing. Here are some additional factors to consider:
1. Any job that will help to repay your student loans. Sometimes teaching, law enforcement, healthcare in underserved communities, etc offer this incentive to attract applicants
2. Any way of getting an education without paying for it. In addition to grants and scholarships, there are also excellent opportunities in the US military.
3. Splitting it up. Get an associates, then find a job that offers tuition assistance. Go to work, and do school part time to get your bachelor's.
4. Community college for the first 18 months to 2 years, then transfer to a 4 yr school.
5. Living somewhere that has a very good public transportation system. You really may not need a car. It takes a little planning, but, there are people who don't have cars!

Do you have any idea what you want to major in, and where you want to go to school? I think that would help us to tailor our responses. Thanks!

Kim
Thank you comment icon This was super helpful, thank you! Jacob
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David’s Answer

I agree with David. If you are about to enter college, or if you are in college, I would definitely suggest meeting with an advisor from your school - preferably an advisor from the financial aid office. Personally, I would not worry about one debt number. Instead I would look at the ratio of debt to your likely starting income. Most colleges will tell you what their average starting salary is for recent graduating classes, you can even ask if they have this for your intended major. The point is that a 40K debt is very different if you're likely to start at 150K/yr. vs. if you're likely to start at 40K/yr. Generally, financial advisors suggest less than 10% ratio of college debt to starting income. That's a good goal, the lower the better, but it may not be achievable, so 15% is probably still OK. What you do want to avoid is getting into the danger zone of 50% or more student debt to income ratio.

I hope this helps. Main points, don't try to solve it all now, set a plan for the first four years, then review and revise as needed once or twice a year. Think more about the ratio of your debt to your income vs. the debt alone.
Thank you comment icon I appreciate you taking the time to answer this. Jacob
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Vamshee’s Answer

Great question and glad that you are starting to think about finance before getting into college.

How much Debt you incur and how long it takes to pay off once you get into a job, depends upon lot of factors and varies a lot from college to college, in state vs out of state, staying in dorm or not, what type of fee waiver or job you avail during college. Hats your starting salary after the college, your spending habits, how you manage your finances etc.

By focusing on earning more and saving more one can pay off debt quickly and also live comfortable life based on income.

I believe in spending wisely, so that you don't end up having more debt than you can afford and also save enough to pay off loans quicker.

Find the following links for more information on planning for students and how to pay off loans quickly, get some ideas.

https://www.thebalancemoney.com/financial-planning-for-college-students-1289960

https://www.nerdwallet.com/article/loans/student-loans/pay-off-student-loans-fast

Hope this helps and wish all success in your planning your finances/future.
Thank you comment icon This was super helpful, thank you! Jacob
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