NEW YORK (MainStreet) -- For many students, getting an education comes at a big expense. According to the Consumer Financial Protection Bureau, private and federal student loan debt has collectively topped the $1 trillion mark.
The growth isn’t related to a record number of new students. Instead, data from the Department of Education reveals many existing borrowers have been unable to keep up with interest payments, and debt is growing even for many who have left school.
This frightening finding indicates just how important it is to head off to college with a financial plan. Here are some important steps students can take while in high school and college to make sure they’re not buried in debt post-graduation.
Take Advanced Placement courses in high school
Dedicated students can “bank” some credits by enrolling in (and acing) the Advanced Placement or AP courses offered at their high schools, says Ornella Grosz, author of Moneylicious: A Financial Clue For Generation Y.
These courses, sponsored by the College Board, are generally considered college level, and many universities will permit incoming students who score high enough on the standardized exam to use them as substitute for core classes.“This is definitely a saver,” Grosz says, noting that her brother, who is two years younger, was able to gain ground on her credits-wise after acing several AP exams.
Do your homework regarding student loans
Students should begin their financial aid search by completing the free FAFSA form online to see what federal aid they are eligible for, says Brent Neiser, senior director at the National Endowment for Financial Education. For a MainStreet breakdown of the FAFSA process, click here.
If you’re pursuing private student loan options, it’s important you understand the verbage in the contracts.
“All student loans are not created equal,” Suzanna de Baca, vice president of wealth strategies at Ameriprise Financial, says. “Some accrue interest while you’re still in school.”
To minimize the chances of ending up with a loan you won’t be able to pay back, de Baca suggests asking a loan officer at your local bank or a family financial adviser to go over common terms and conditions with you. You can also check out MainStreet’s round up of 10 student loan terms explained for a basic tutorial.