Benefits and drawbacks of college loans

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- The great majority of students

have debt when they graduate from college.

The average for a student
going to a public school

is about $26,000 of debt.

For a private school it's
around $29,000 of debt.

- Taking out loans to
pay for your education

is a highly, highly, personal
decision making process.

And it gets complicated because I think

families tend to advise students

and sometimes that advice is very helpful

and other times it's kind of antagonistic

because it just adds another pressure

that you have to keep in mind.

And sometimes the pressure is

to take out loans because no one has

money right now, or in other times

it's we're not taking out any loans

because we have no money to pay it back.

Which might mean that if you're not going

to take out loans, you need
to pay everything right now.

Which means you might have to work

a whole lot more, somehow, in order

to pay for your education.

And so my biggest advice is to
think very practically about

can you actually pay back those loans?

- Always have an understanding of

what is your overall indebtedness.

I see students get into trouble because

they just keep taking out loans every year

and then it's a big surprise for them

at the end of four
years how much they owe.

So you should know how
much you've borrowed,

you should know what that means in terms

of monthly payments when you graduate.

What's the dollar amount that you're

going to be responsible for?

And have an understanding
of basic budgeting.

What does that mean in terms of what will

your lifestyle need to
be when you graduate.

So don't just take out
those loans blindly.

Know what the monthly payment
obligation is going to be,

what that means for you

once you're out in the world of work.

Unfortunately, we can't avoid
those student loans forever.

So it means taking out loans for

reasons that will keep you in school.

Taking out a loan because you want to do

a really fun spring break
probably isn't a good idea.

- So especially the work that I've done,

and I was a low income student,

you have to think of loans in the context

of going to colleges and
investment in yourself.

Yes it's debt, but it's also an investment

and if you realize that a
student with a college degree

makes a million more dollars over the span

of their lifetime than a student
with a high school degree,

$26,000 of debt to a return
of over a million extra

dollars is a pretty good
investment in yourself.

So it takes a bit of a mindset adjustment.

It's a scary amount when
you're a low income student,

and think "Oh my gosh $20,000 in debt,"

but that's why it's also really critical

for you to pick a school
that really is going to

help you be successful and graduate.

Taking out loan also
helps you build up credit,

which is a good thing,
and get a credit score,

but in general, again, most
students are going to have loan

and they need to kind of think about the

school they're going to go to

to pay back that loan, but also

again it's an investment in themselves.