7 On Your Side: How to keep college loans low

7 On Your Side takes a look at ways students could go to college and not dig themselves into massive debt.
November 14, 2013 7:32:32 PM PST
Millions of high school seniors are busy filling out college applications for next year, but getting in to your dream school isn't the only hurdle. A startling new report shows college students are deeper in debt than ever before -- a record $1 trillion. However, 7 On Your Side takes a look at how there is a way to for students to stay completely out of debt.

It used to be you could go to college and be financially set for life. Now, college is more likely to sink you into the red. There are 37 million graduates struggling to pay off loans, most of them doing so well into their 30s. However, we have discovered one key strategy that can help you start your life free of student debt.

If you take a walk across the quad or peek into a classroom, students everywhere are buried in their studies on any college campus. What's not so apparent is the statistic that nearly two-thirds are also buried in debt.

"Like every kids wants to do, they want to go to college," said Joe Caston of San Rafael. He works as a personal trainer in Sausalito and he is trying to pay back loans he took out seven years ago. "The student loans out there, they were so easy and obtainable, kids like myself, we don't think at the time, 'OK, well what's going to happen in the future?'"

He had enrolled in community college to study criminal justice and play football. He took out $23,000 in private loans to pay for rent, books, and tuition. The money went fast, but his debt grew faster.

"All of a sudden you get hit with all these interest rates," said Caston. Before he knew it, his debt had doubled to $57,000 and was still growing. "I would sooner or later have to pay over $100,000 back and me, myself, can definitely not afford anything like that."

So Caston dropped out.

"I still remember the day I got in. It was March 25, 2011," said Anna Carlos of Arizona. She was thrilled when she got into U.C. Berkeley and so were her parents, who are immigrants from the Philippines. "The main reason why I decided to go to Cal is because it's part of our American dream, I guess."

The family took on the huge expense to send her to Cal. It was about $50,000 per year for an out-of-state student. It includes $20,000 in student loans that come due at graduation.

"So there's definitely a lot of sacrifices on my family's side," said Carlos.

She is so concerned she's trying to graduate in three years instead of the usual four.

"As of now, I'm taking 18 units and I'm also doing a work study job. I work at the chemistry libraries," said Carlos.

Frances Fee specializes in helping families avoid student debt. She says there is one secret, one key to avoiding red ink. She said, "Having many schools on a list, like 10, 12 schools, opens up more possibilities."

Fee says apply to a range of schools, like a dozen or more. One of them is bound to give you a healthy financial package. You are very likely to get a lot of aid from schools where you would be a strong student, so apply there.

"I encourage parents to speak with their students and not have only one school in the entire United States that they want to go to," said Fee.

To get that aid, fill out the free application for federal student aid, known as FAFSA. Nearly all schools use that to determine how much to give you. Fee says don't take out more than $25,000 over four years.

Carlos did sacrifice for her dream school, but says it is worth it for herself and her family. She said, "I know that it's important for them that I go here because why they moved to America was so that I could get a good education."

It's very important that every college you apply to get a copy of the Federal Student Aid Form. That will help you get the most money. You can also apply for scholarships. There are millions of organizations giving out money.

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