college

3 tips to limit student debt

Tip No. 3: Choose the right school

When a student is evaluating a school, he or she must find out the amount of financial aid to expect from the university. The amount of financial aid a student is offered varies from school to school.

Students take on debt to fill in where financial aid leaves off. Once a student knows the financial aid amount, he or she can calculate the actual price tag of a particular school and decide whether the amount of debt required for that school is reasonable.

High school seniors may not know what their major will be and the salary they can expect. Here, parents must become involved to help determine appropriate debt, says Cathy Simoneaux, director of the Office of Scholarship and Financial Aid, Loyola University in New Orleans.

Saleh agrees that students and their parents should set a maximum student debt for themselves, regardless of what the career might be. "Students getting $40,000 in debt need to pull back and look at what they are doing, no matter how high-paying a career (they are aiming for)," Saleh says.

Kantrowitz says another barometer for choosing a school is the success or failure of former students of paying back their debt.

Beware of a repayment rate of the college total student debt of 25 percent or less, Kantrowitz says. That means only one-quarter of former students or less are paying their student loans in full each month.

A lack of progress at reducing debt could indicate that grads are deferring or defaulting on their student loans, perhaps because they can't get a job. That, in turn, raises questions about the training they received at the school, Kantrowitz says. You can find repayment rate information at the Department of Education. Saleh says poor repayment rates may reflect how many students actually graduated. And Brooks says schools with higher rates may be better at helping graduates navigate job placements.

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