Woman with laptop sitting on ground on college campus

It takes just a quick perusal of any job board to learn that the best-paying jobs are reserved for people who have pursued higher education. According to a study conducted last year by the Federal Reserve Bank of New York, college graduates earn an average of $30,000 more per year than high school graduates. Multiply that over a 40-year career and that’s a lot of prosperity to grab. 

But a college education—or the post-graduate study that often lifts you into a higher income bracket still—doesn’t come cheap. You can expect to pay about $88,000 for a 4-year degree from a public university in your home state and more than double that if you elect to attend a private institution. Thinking about pursuing an MBA? That will set you back a minimum of $50,000 and much more if you attend a top-tier private school. 

Of course, many, many students qualify for scholarships and various forms of university-funded financial aid, which can bring the cost of higher education down considerably. In any case, even at the upper reaches of the tuition scale—a year at Yale University costs nearly $58,000 exclusive or room, board, and other expenses—most financial advisors would tell you that a college education is a good investment. Spend forty years in the working world and it can earn you an extra million dollars. 

But all of that happens in the future. The dilemma most students face is how to pay for college in the here and now. Yes, they understand college is an investment. But as the saying goes, it takes money to make money. That’s why about one-third of US adults under the age of 30 are carrying student loan debt. And an unfortunate percentage of them are struggling to pay it off, particularly since the global pandemic has wreaked havoc on the economy. Maybe you’re among them. Or maybe you’re just planning your education right now. In either case, what you need is an education and education debt strategy. Let’s take a look at how you can develop your own and how having one can help you walk the path to a more fulfilling future.

Learn What You Love

You can read all the research there is on the fastest-growing industries and the most promising or lucrative careers—and all of that is great background. But that knowledge won’t necessarily guide you toward happiness. You also need to spend time researching yourself.  The first step in developing an education strategy is to look inward and develop a vision of who you want to become, both professionally and personally. Some of us have passions and aptitudes that supersede nearly any other concern in our lives. Your strategy should seek to balance economic realities with personal truths. 

Here’s one example. Health care is often cited as one industry poised for long-term growth. What role can you see yourself playing in that field? Maybe you love technology and would be happy researching or designing innovative medical equipment. Maybe you’re artistically inclined and would thrive as an art or music therapist. Or maybe you gather energy from helping people and would be most satisfied in a role that puts you in direct contact with patients. As you can see, a wide range of people might find a satisfying job in this rapidly growing field. 

How to Build Your Personal Education Strategy

It doesn’t have to be complicated. In fact, we can boil it down to four simple steps: 

  • Focus on what you would love to do

  • Find a promising industry where you can do it 

  • Learn what you need to know to do it well 

  • Choose a school that’s highly-respected for teaching it 

Can You Earn Money Doing What You Love?

Interestingly, some research suggests that people who feel fulfilled by their careers earn more than people who don’t love what they do. But more earning power doesn’t necessarily equate with more happiness, at least not forever. There’s a point of diminishing returns. One famous study conducted by Princeton University suggested that point, at least in 2010, was around $75,000. The study found that happiness increased as people climbed the salary ladder to that level. But it didn’t increase when people earned more. You can make adjustments for inflation but the underlying point remains. The almighty dollar isn’t so mighty when it comes to matters of the heart and spirit.

Building Your Student Debt Strategy

How much should you spend on your education? If you had all the money in the world, the answer to that question would be simple. Spend what you need to get the education you want. But most people borrow money to fund their college degrees. And many spend 20 years or more paying it off. When deciding how much to spend on your education, it’s important to be realistic about how much you can expect to earn when you’ve completed your degree. You should also take into account your estimated living expenses, which will vary by location. Using online resources, you can get a reasonably accurate idea of how much money you’ll have left over for paying off your student loans each month after paying for essential expenses. 

Your Best Educational Financing Option

The best way to finance your education is with money you never have to pay back. Researching available scholarships should be your first step—and the world is full of them. Some are issued directly by the university you choose to attend, but many other organizations sponsor students, too. Many scholarships are merit-based and are granted based on high academic achievement. Others are need-based and take your income into account (or your parents’ if you are still a dependent). But you’d be surprised by the many organizations that issue scholarships and the variety of ways you might qualify for one. Your benefactor might be a corporation, a local civic group, a church, or a labor union. Large non-profit organizations often sponsor scholarships as a way of furthering their missions. Environmental science scholarships have become more plentiful in recent years, for example. The most important thing to remember about scholarships is they have strict application deadlines. Applying early is your best bet. The good news is that you can apply for and receive multiple scholarships each academic year. Scholarships can fund a significant portion of your tuition and living expenses, but they won’t affect your budget 20 years down the road.

Understanding Student Loans

A loan is something you have to pay back and the amount you pay will be larger than the amount you borrow: loans come with interest. You might think that the best student loan is simply the one that comes with the lowest interest rate, but there are other factors to consider. 

Loans funded by the federal government come with distinct advantages. Sometimes they offer lower interest rates that are fixed for the entire time you’re paying them off. You don’t need a high credit score to get one. The amount you pay each month on a federal loan is based on your income. When you earn less, you’re expected to pay less. But there are limits on how much you can borrow from the Federal government and you may not be able to cover your full tuition and living expenses with federal funds. That’s why many students turn to private student loans.   

When you choose a private student loan, you can opt for a fixed-rate loan like the government offers or a variable-rate loan. Variable-rate loans often come with a lower interest rate initially, but that rate can go up in just a few years if the credit market changes. The interest rate you’re offered will be closely tied to your credit history. The higher your credit score, the lower the rate you’ll typically be offered. So if you apply for a private student loan, you may want to spend some time improving your credit first.  If you’re just starting out in life, chances are you don’t even have a credit score. That’s why you may need a co-signer (like a parent) to be approved for a loan. Private student loans also vary in terms of your payment schedule. For example, some loans don’t require you to begin making payments until you graduate. Some loans also include a forbearance feature: they allow you to postpone making payments for a limited time in the event you experience serious financial hardship.

Managing Your Existing Debt

Here’s a tip for you if you’ve already accumulated some student debt. Depending on the interest rate you’re currently paying, you may be able to lower your monthly payment and the lifetime cost of your loan. Due to the coronavirus, interest rates on a wide variety of loans are presently lower than they were just a year ago. They might be quite a bit lower than they were when you originally took out your loan. Now might be a great time to consider refinancing your existing loan. Securing a lower, fixed-rate loan can help you keep more of what you earn while making progress toward paying off your loans entirely. 

by Susan Doktor

Susan Doktor is a journalist and business strategist who’s been doing what she loves for many years. She writes on a wide range of topics, including finance, sustainability, government affairs, pets, and food and wine. Follow her on Twitter @branddoktor.

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