Student Debt Should Be National Emergency: How To Cope With Crisis

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Over the course of two decades, student debt has increased dramatically and prevented millions of Americans from attending school due to the financial burden. To combat this, parents have struggled to provide options for their children who wish to get the college experience. At $1.6 trillion, and ever increasing, student debt has even exceeded past car loans and credit card debt. Combating the crises has been tough. Black Star News interviewed James Ryan of CollegeBacker and Shaan Patel of Prep Expert about the crisis.

BSN: The current student debt is $1.6 trillion and climbing. The convenience of paying off the student loans hasn’t been the most affordable. What other methods could you provide for current and recently graduated students?

Patel: One thing is reducing your tuition bill as much as possible. What I mean by that is trying to win merit based scholarships and there’s a strategy to that. The best way, whether you’re a high school or college student, is to research local scholarships in your area. There are many companies in your local city or state giving away scholarships only available to students in the area. There are parents and students that go about applying for scholarships in the wrong way. They apply for scholarships from Fast Web and other big national scholarships. The problem with that is when you apply for national; that’s open to students across the nation. There’s lots of competition, but if you apply to a scholarship open only to students in your state, for example, you’ve reduced the competition by 50 times and your chances of winning local scholarships is much higher. I really encourage students to look for local scholarships to help reduce their tuition.

Ryan: The biggest solution is to not get into debt in the first place or minimize debt. I know people get into trouble, part of this is no fault of their own because over the last couple of decades, college costs have skyrocketed and I don’t think people expected that. Now that we know the situation, we know college is expensive and is going to get more expensive, it’s important for families to start saving. These days with costs rising everyone is going to have to come together to help provide for a child’s college. I think there’s the issue of students becoming overly optimistic about their earnings potential after they get a degree. Maybe they weren’t that careful. During college, try to be frugal as possible. Be careful about those five dollar days at Starbucks which add up over the course of the year. Take on as little as possible that way you have more options when you leave college. There are parents who’ve provided options for their child when they didn’t have enough funds for their children to attend college and it causes further financial strain. 

BSN: Mr. Ryan, how did CollegeBacker produce the idea to combat the rising costs of college?

Ryan: For those who have parents with children or are expecting, the earlier you save, the better. What CollegeBacker is here to do is to help make people aware the government has set up something called ‘The 529’ plan which enables families to save for college and any gains on those savings deductions are tax-free. A 529 Plan sounds very much like a 401k for retirement, but this is a tax free plan for college savings. About 70 percent of Americans are not aware that this exists and the people who take advantage of it tend to be wealthier people.

In particular, people of color in America aren’t utilizing this opportunity to the same degree as white families. African-Americans are three times less likely than to have savings in a 529 plan. They use savings accounts and investment vehicles that aren’t tax free utmost because they’re not aware of a 529 or it can seem complicated to set one up and make investment decisions. We created CollegeBacker to help more people become aware of these 529 plan and to make it easier to set them up by eliminating the complex and difficult decisions.

BSN: Searching for scholarships is always a task that can consume your day. Mr. Patel, what tips can you offer for current students?

Patel: If I was a student in Brooklyn, I would look up scholarships online for Brooklyn scholarships, then look at New York City scholarships and New York state scholarships. A simple Google search will help find scholarships open to students in your particular region, city, or state. Another thing you can do is look for what are called scholarship foundations in your particular area. Often times, there’ll be a scholarship foundation that disperses scholarships for many companies in the area and only offer scholarships to students in the area. For example, I grew up in Las Vegas, Nevada. We had what was called the Clark County Public Education Foundation. They offered scholarships open only to students in Clark County.

BSN: Many high schoolers go into college blind not aware of tuition costs. Do you have any preparation advice for the incoming freshman?

Patel: For a long time, I own an SAT and ACT prep company and I used to encourage students to go to the most prestigious university possible with their S.A.T. scores. Now, with the cost of college skyrocketing, as you mentioned, the college debt at 1.5 trillion dollars, I really go back and encourage students to go to the most affordable college. Whether that’s the state college or community college, I tell people to look less at the name brand of the school and more the tuition bill because you don’t want to be stuck with hundreds of thousands of dollars in debt just for an undergraduate degree.

BSN: Regarding today’s economic climate, do you believe the student debt will inflate or decrease?

Patel: Being an entrepreneur myself, I think that educationally minded entrepreneurs will find ways to reduce the student deb for the national population that may be lowering the cost through alternative higher education options. I think that’ll make it more affordable. Of course, the traditional name brand colleges will have to follow suit, but I think we’re probably near the peak of the student debt crisis as more and more awareness is becoming known about it and, hopefully, it will be downhill over the next five-ten years. I don’t see it getting too much worse from here.

Ryan: I think people need to plan for college expenses to increase and, if they’re unable to save enough to plan ahead, then student debt will also increase. Given the political climate, it’s very unlikely there will be government funding available for college, so I believe families need to plan ahead with the expectation that costs will increase. 

For more information, check out CollegeBacker and PrepExpert here:


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