6 Ways to Avoid The Horrors of Student Debt

In my last post, I talked about why I’m not a big fan of student loans. I believe that most people don’t need to get student loans, and that if you think you need to get student loans, you very likely don’t need to.

I found two articles that shows the extent to which student loans in American is messing up with people’s dreams and plans:

And if you think these are horror stories of people with $1,000,000 in debt, think again. In fact, one of those featured in that first article owed about $20,000, but the debt feels “oppressive” since he couldn’t find a college-level job, so he had to relocate to India.

And that’s the biggest driver I see here: If you’re thinking of getting a degree on student loans, you had better BE SURE that you’ll be getting a good job with that degree.

It’s the reason why people are encouraged to take out loans for a medical degree or to learn coding. Doctors and programmers are some of the highest-paid professionals, and if they can slog through the challenges, they might be able to come out ahead.

So, in this post, I thought I’d share 7 tips to help you avoid the painful horror stories you hear in the news about student loans:

1. Be Paranoid About Promises

I’ll start with the biggest factor people overlook – the chances of a good-paying job after getting a degree. Schools might tell you their program is the best, and your ‘chances’ of getting a job after graduating from their schools is ‘95%’ or ‘98%’, but you need to do your own due diligence.

You need to be paranoid and do your own research. Forget about the promises schools are making to you. Forget about vague outcomes schools boast of – for example, “broaden your horizons”, “make an impact”, “refine your leadership skills.” Those are mere buzzwords and they won’t put food on the table.

Ask yourself:

  • What kind of job do I want when you graduate?
  • How’s the industry with that job currently doing? Is there a consistent demand for new graduates or does hiring depends on a lot of external factors? For example, volatile oil prices in the Oil & Gas industry
  • What’s the starting salary for graduates with this degree?
  • Will this salary be a comfortable take-home pay for me in the city where this job is based/where I plan to move to?
  • Based on my accomplishments, what do I need to start working on NOW that will put me in the best position to get those job?

No one will do this work for you, but if you want to escape student loans, then you have to go beyond what schools tell you – you need to go the extra mile to find the answers for yourself, and decide accordingly.

2. Be Cautious of Popular Opinions

For the longest time, society still thinks a lot of traditional degrees still pay a lot, and that jobs are easier to come by. For example, a lot of engineering degrees. When you tell people you’re getting an engineering degree, folks automatically assume you’re set for life, and would soon be earning 6-figures once you graduate.

The truth is: there are only a few engineering degrees that still hold high prospects for good-paying jobs e.g. computer science/engineering, chemical engineering, mechanical engineering and allied fields.

It’s good to know the average starting salaries for jobs in your field, but you need to dig deeper to see what society isn’t telling you. Contrary to what you might see in mainstream media, you can’t just get an engineering job and expect to get a 6-figure job right once your graduate. You have to study certain engineering degrees, know certain skill sets, and be ready to do a lot of unexciting work (that may not sound hip, but pays you good money) in the most remote locations and under harsh weather conditions.

The more you know about your industry, the easier it is to adjust your expectations, and prepare accordingly.

The same thing goes for MBA degrees. General opinion makes it sound like getting an MBA means you should be getting offers from ANY business, since every business would definitely want someone who has learnt about businesses.

But that’s simply not true.

Before you apply to an MBA program, look at the jobs that past graduates have gotten after graduation, and how long it took them to get those jobs. The truth is, getting an MBA degree from 98% of U.S. MBA schools means you need to learn specific skills not taught in the classroom, based on what you plan to do thereafter.

You can say the same for law school degrees.

3. Prepare for College by Doing Excellent Work

One of the best ways to graduate with no student loans is to get funding, scholarships, or grants. And I don’t know of any better way to do that, than to perform your absolute best before coming to college. Get excellent scores on your college entrance tests, and do your own research on internal and external scholarships you might qualify for.

Even though I took my first GRE for my first master’s program, I chose to take the GRE the second time while preparing to apply for my MBA. That way, I was able to build up more profile to be more competitive when I applied to my MBA program, which means I was able to qualify for more stipends and scholarships than I would have otherwise.

4. Be Clear About The Sacrifices You’ll Make

For most people, staying out of student debt WILL take conscious and definite actions. You can’t just ‘play it by ear.’ You need to have your skin in the game. Having this level of commitment is important, because you need to be very clear about the sacrifices you’ll need to make.

If you want to avoid student loans and set yourself up for success, you’ll need to:

  • Learn to save
  • Choose not to go out, or drink, even when your friends want you to
  • Decide if going to a community college for the first few years might be a better option for you
  • Attend an in-state college to save money on out-of-state tuition
  • Live at home, and not living in a dorm
  • Stay up late some nights night in order to stay ahead
  • Quit distractions and work hard, so you can graduate with a degree in a hard major, but that pays well

I would be honest: these things are not easy. And chances are, you will need to stop doing certain things, so you can start doing these things. So, by being clear on the sacrifices you need to make to stay out of student loans, it becomes easier to push through and follow through with these sacrifices when the going gets tough.

5. Take a Job and Find Time to Level Up Your Skills

No job DOES NOT EQUAL more degrees.

If you can’t get the kind of job that you want, the automatic solution is NOT to get more degrees, just to stay in school till you figure things out. Rather, find out the gaps you need to close to get that job that you want, and find the time to close those gaps.

Most times, you won’t need more schooling or an advanced degree to close those gaps. You only need to find out the skills your dream employers want, and learn those skills. Now, it might be harder for you to level up your skills, if you can’t even feed yourself or your family.

So, it’s a good idea to get a job – any well-meaning job that lets you put food on the table – and then find a lot of spare time to level up your skills. That way, you will avoid student loans and also be on your way to landing your dream job.

6. Live Like a College Student

If you’re in college, then live like you’re in college. If you ever decide to get student loans, don’t use it to pay for living expenses. Believe me, a family (parents and kids) live on a lot less than you think you need in college. And here’s the beautiful part: no one will spite you for living this frugally as a college student. People expect you to leave that way, so why not use the opportunity to live on less now, so you can enjoy more later?

Over to you: What steps are you taking to avoid getting (more) student loans?

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