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What To Know Before You Take A Student Loan

NBC 7 Responds has some tips on how to proceed when thinking about taking out a student loan

Student loan debt in America has now surpassed the $1.5 trillion dollar mark. Studies show that 70 percent of college students are already in “significant” debt by the time they order their cap and gown.

On average, graduates of San Diego County public colleges and universities owe just under $9,500 by the time they walk away with a degree. For those attending San Diego County’s private universities and colleges, the average amount is $16,000.

“It’s really scary,” said UC San Diego senior Maria Alvarez, who has taken out loans since her Freshman year. “You don’t know whether you’re taking out enough. I could have taken out more but I stayed on the safe side.”

But Alvarez is the exception to the rule. With college tuition increasing and the cost of living doing the same, students and parents of students have few options other than taking out loans to get them through college.

NBC 7 Responds has some tips before taking on student debt.

First, know that while the loans will help you get through college, they will need to be paid back.

Experts say potential borrowers should take a long hard look at what life after college really looks like.

“Borrowers should ask themselves what skill sets they will have to be generating enough income to pay off these large debts,” said Nikhil Varaiya, professor of finance at San Diego State University.

The career path you or your student chooses could indicate how much debt you can expect.

Some trade schools leave students with little debt when they graduate and large salaries after ten-years of working.

For example, NBC 7 Responds found students who graduate schools that specialize in training for "Transportation and Moving Materials" left on average with $6,333 in student loan debt. And in 10 years, those same borrowers reported earning average salaries of $34,800.

Culinary trade schools are among the most attended. There, students graduated with an average of $10,666 of student loan debt and in ten years, they earn an average salary of $18,500.

Knowing what job opportunities are available might force borrowers to reconsider buying a new car or other large ticket items that require financing.

“Students should ask themselves what sort of income will they earn in order to support their lifestyle while paying the debts, including student loans, that they incurred,” said Nikhil Varaiya, a finance professor at San Diego State University.

Most importantly, students applying for loans need to understand that the loans they get when they are 18 or 19 years old will likely be with them in their thirties and forties.

“I know there’s a lot of people that spend decades trying to pay off their student loan debt,” says Sonya Ochao, a junior at UC San Diego, who has taken out more $8,000 in student loans since enrolling.

Experts say not realizing the realities before signing on the dotted line could have a lasting financial and emotional impact.

“There is a growing sense of overwhelming discontent,” added financial planner Mary Beth Storjohann. “People are unsure how to proceed and it’s a heavyweight that I see a lot of people carrying around.”

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