The cost of attending college has risen significantly over the last 20 years and looks set to increase even further in the future as the cost-of-living crisis continues unabated.
Living costs in the US vary significantly from state to state. As with most countries, living in or near a big city is more expensive than living in smaller towns or outlying areas, but studies have found the average cost for a college education across America is high and getting even higher.
When you are planning for college you will need to factor in the Cost of Attendance (COA). The average cost of attendance for a student living on campus at a public state institution works out to $102,828 over 4 years. COA refers to the total cost of college but doesn’t include things like transportation costs and your daily living expenses.
COA does include tuition fees, as well as any supplies needed, or books required. It also covers room and board for those students living on campus. This means if you have a student loan, it may be possible to pay for your room and board with your loan.
The effect of student loans on future financial plans
It would be best to avoid a student loan, if possible, as the debt load can take a toll on your financial future. Studies reveal that the average person with student loan debt spends roughly twenty years paying it off. That is two decades of dealing with the stress and pressure of debt every month.
This means that graduates have less disposable income to begin their lives or to start a business. Statistics show that student borrowers pay an average of $2,186 in interest each year on their loans. That adds up to a lot over twenty years.
“Getting yourself into long-term debt should not be plan A," says Glenn Werner, Vice President of David Lerner Associates. "If you can avoid it, you should do so at all costs. Planning for college takes time and investment. The sooner you start planning, the better your position is going to be later in life."
It usually takes 4 years to earn a bachelor’s degree, but under 40 percent of students graduate within that period. It takes far longer for most people to complete their bachelor’s degree. Just over 96 percent of bachelor’s degree graduates finish within 6 years! Add up the cost of attendance for 6 years and the average cost works out to a whopping $213,306. So, before you decide that jumping into a costly college loan is your only option, look for alternatives.
Time is one thing young graduates have on their side. With more money to invest, you will be in a far better financial position as you grow older. That is why getting sound financial advice early on is essential.
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