Here’s a sad reality: a college education has become synonymous with debt.

Have you noticed the stunning number of twenty-something’s who are saddled with out-sized debt burdens? Most are college graduates.

This shouldn’t come as a surprise. According to the Project on Student Debt, the average debt from student loans carried by college graduates in 2010 was $25,250. Given the relentless rise in college costs, we can expect the number to be higher for those who have graduated since.

And the number above is just an average. It’s all too common to hear of students in debt to the tune of $50,000, and even $100,000 or more.

Student loans versus other debt

After decades of being told that student loans are “good debt,” many are finding that – good debt or not – it’s still debt. Even with deferrals, low interest rates and low monthly payments, the loans must be repaid. And that means a drag on future income and personal options, usually for a very long time.

But student loans have some other features that make them more restrictive than other forms of debt. Since they’re unsecured, you don’t have an underlying asset like a house or a car to sell if you want to pay off the debt. In that regard they’re more like fixed credit cards. And if your financial situation gets really bad, you can’t discharge them in bankruptcy.

Remember, no matter how bad your financial condition, there’s no way out of a student loan.

Matt’s note: there are student loan relief programs applicable for specific circumstances.

What if you don’t finish college?

If you finish college and get your degree, though buried in student loan debt at least you’ll have earned the sought-after credential that will provide you with an opportunity to earn an income that will enable you to payoff your debt. But what if you don’t finish?

Nearly half the students who start college don’t finish.

There are all kinds of reasons why: family or personal issues, burning out on school, or even being spooked by the rising level of debt they’re getting into. If they took out student loans during their time in school they will still have to pay them back even though they didn’t graduate. In many cases, they won’t have the earning power, not having a degree.

Since there are no limits on how much a student can borrow, a non-grad can easily accumulate a five figure debt load in just a couple of years in school.

Debt begets more debt

One of the darker aspects of education debt is the way it can set the student up for a lifetime of indebtedness. Students in debt usually become adults in debt – the pattern is established early.

Loans are taken to pay for education, but along the way credit cards are often used to cover what student loans won’t. At graduation, new cars are usually purchased to commute to the new job, bringing another loan. At 21 or 22, a new grad enters the work force armed with a college degree, credit card debts, an auto loan, and copious amounts of student loan debt.

This isn’t to say that you can’t get out of debt from this position, only you’ll have to overcome a mountain and an entrenched habit to do it; and habits are not easily broken, especially when new debt is often needed to cover new expenses because new income is committed to pay for old debts.

You have to break the debt habit!

The debt-free way to a college education

Given the debt hole that many college students get into, and the uncertainty of the job market, it’s worth exploring less expensive ways to earn a degree. You may be able to get a college education without going into debt to do it, or at least keeping debt to a minimum.

Community colleges. Most areas of the county are served by local community colleges that you can attend for your first two years. Not only are they far less expensive than traditional four year colleges, but they typically award an associate’s degree that’s a solid advantage if you decide that you’re done with college after two years. If not, you can go on to a four year school.

“Commuter colleges.” Living on campus raises the overall cost of a college education substantially – and the debt that’s used to pay for it. If you attend a college in your local area you can commute to it, eliminating the need for room and board costs.

Work-study. For what ever reason this form of getting an education has fallen into disfavor. But with the cost of college rising to levels that are beyond middle class pocketbooks, it’s time to rediscover and embrace this once beloved route. Work-study, where you work at a paying job in a related field while you’re in school, will reduce the need to borrow money to pay expenses in college. It can work especially well for community or commuter-college students, combining income earning with lower education costs.

Conclusion

College costs continue to rise, keeping students in debt at ever-increasing levels. Once you have those debts the only way to eliminate or reduce them is to pay them off. And the larger the debt, the more difficult the repayment. Minimizing or avoiding them upfront is the best course of action.

Do you have a student loan story to share?

Matt’s note: Betsy and I still owe over $50,000 of student loans; and it’s the only debt we have. They take a long time to repay, and neither of us are working in our field of study any longer.

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