College acceptance letter season is just around the corner, and while students anticipate their letters of either congratulations or regret, a very different letter found in those same envelopes can cause much stress: financial aid decision letters.
There are currently more than 40 million Americans in student loan debt, and with growing tuition costs nationwide, that number is only increasing.
Luckily, a new opportunity for financial education in Western New York is there to help those with questions about approaching this often-inevitable debt.
The Establishment, a project started by MassMutual, offers financial education classes on credit scores, investing and, of course, student loans.
The Establishment functions as a welcome and valuable resource for those with little knowledge of what to do in their financial situation, no matter who you are, what you do or where you’re trying to go.
At a recent Making Sense of Student Loans class at the Establishment’s office in the Tony Walker Center in Williamsville, the following information about student loans was made clear:
• The quicker loans get paid off the better because, aside from obvious reasons, interests rates increase over time.
• Certain professions and graduate programs offer more forgiving plans to pay off student loan debt.
• Consolidating allows for a longer time to pay off loans, but can eliminate any chance of future loan forgiveness.
• Always have a plan to pay off your loans, whether it be long-term or specific.
• Never hesitate to contact your lender if you have questions or concerns,especially if they’re about lesser or income-based payments.
Student loans are inescapable, and even if an indebted person passes away their debt lingers on and is passed on to an unlucky relative. Therefore, it’s important to understand as much as possible about loans. Is it more rewarding to have lower interest rates, or emergency funds saved? Is having no debt five years after graduation worth having no money for other necessities, or is it better to carry your debt with you in order to live with higher standards? The cold hard truth is that there is no right answer.
“It really comes down to personal preference,” said the Establishment’s Ray Pavicich, referring to payment options. “You have to decide which weighs more in your mind, the price of living or getting rid of your debt.”
There are benefits to both rapidly paying off debt after graduation and eventual payment, but the depth of those benefits vary depending on individual preferences.
In 2016, it’s common knowledge that it’s always better to take the path with no student loans rather than taking on debt at such a young age. But the decision most high school seniors will have to make in May is much more complicated than it seems.
An acceptance to a prestigious college means nothing without a scholarship, yet it’s difficult to commit to a school with a lesser reputation if the opportunity to attend a better-known school is available.
In this common, tricky situation the same cold, hard truth remains.
“A lot depends on your own values,” Pavicich explained. “You have to be willing to pay for what could be a great experience,” even if it means years of paying off debt.
Many students will choose the expensive path, and this is the advice offered by other class attendees for those students:
• Always take care of refund checks right away and never ignore them.
• Put at least $50 aside just once a month toward future interest payments because every dollar makes a difference.
• Always keep an eye out for graduate programs that assist in paying student loan debt.
The cost living is high. The education required for a high-paying job is nearly unaffordable for some. But this isn’t only influencing students. Fewer women are willing to have children, and more and more workers are putting extra money aside for retirement. The NeXt generation will be one of a kind because of these economic trends, so it only increases the importance of understanding the financial world.
Alexa Rosenblatt is a senior at City Honors.