Kim Cox, the branch manager and financial consultant at Ouachita Valley Federal Credit Union has been helping families sort through financial aid for college.
While many families come in with a game plan, others don’t.
"A lot of these people that we see have not prepared for college, " says Cox.
Instead of saving, more families are choosing student loans to pay for school. Unlike a house which can be foreclosed on, or a car that can be repossessed, student loans don’t disappear.
“A student loan debt is one of the only debts, besides taxes, that are not dischargeable in a bankruptcy,” adds Cox. “There’s no way to get rid of that debt.”
Student loans can be an attractive offer for college students because it means quick cash today. Most loans don’t have to be repaid until after graduation. But even with payments, large sums of student loan debt come with negative side effects.
“Five, six, seven years down the line when these individuals are now professionals in the work environment, and they’re wanting to purchase a new home or another vehicle, their student loan debt hangs on that,” says Cox. “It causes their debt-to -income ratio to be so high they won’t be able to even qualify for such a loan.”
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“It’s certainly there for them to cover necessary costs they have or for out of pocket expenses,” says Assistant Vice President for Enrollment, Lisa Miller. “It’s not there to have a lucrative lifestyle, which is often very tempting for young people.”
She says students and parents need to explore all options before taking student loans.
“There’s always going to be that day when they have to pay it back,” adds Miller.
Kim Cox says families should start saving for college during a child’s younger years.
That way they don’t end up sitting at her desk, trying to secure a student loan.
“My best advice that I’ve got for anyone right now is to prepare. Prepare as early as you can,” adds Cox.
Students should fill out a Free Application For Student Aid or FAFSA-form before making any decisions about student loans from private sources.
Parents should also consider keeping kids in state to take advantage of state wide grants and scholarships.
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