How to Deal with College Debt – Part 1

The best scenario for those facing college debt is to start dealing with it the moment you take your first loan. If you have graduated and are now trying to decide if it is possible to pay off your loans, while continuing to eat and live indoors, do not panic. There is a way forward. But we’ll start with those who still are in school and can make choices to reduce debt load now.

First and foremost: tithe. Give your tithe and offerings. Tithe off your gross, not your net. Yes, that sounds painful and will feel that way when you start but you will be amazed how God is faithful to bless you. One of the ways to tie up this generation is to be sure they are so self-focused on their personal debt they do not give sacrificially. God honors His Word and He actually will do miraculous things to ensure you meet your obligations if you are responsible. Responsibility means tithing, giving to missions, paying your college and even chipping in for gas when you borrow a car or ask for a ride to work.

Next, fill out the FAFSA using your best “guesstimate” from the previous year and do that at the start of January. When you fill out your taxes go back in and use the “Data Retrieval Tool” which is a box you will check that downloads your filed return into FAFSA. It is to your advantage to fill out the FAFSA early. Just be certain you update and finalize it when your taxes are complete.

Do your “loan homework”. There are resources from little known scholarships, to crowd-source donation websites that can help reduce what you borrow. I will not recommend any particular site but you can find them with a search engine. Do some “smart shopping” to avoid high interest rates. When you do take loans, take the least amount you need at the lowest rate possible. Do not borrow extra money for living expenses beyond room and board. “Board” means meals. Though few Bible colleges are known for extraordinary meals, you paid for those meals so better to eat them then go to Chipotle. Never borrow more than you absolutely must. Trust God and get job to pay for extras or go without. It is good practice for life after school.

Remember that 1098 Form Brother Ed sends you every year? Keep it. It is vital to your financial well-being. Use that to be sure you or your parents take the American Opportunity Tax Credit. Unless you are a higher wage earner, that credit, which ends in December 2017, will be the most advantageous tax credit going to cut down on debt and pay your bills. It is possible to receive up to $2500 per year per student. If you or your family have not taken this credit when you were eligible you can get the money back retroactively by filing an amendment.  The credit can only be taken for four years and is worth $1000 even if you have no taxable income. Would four to ten grand make your life easier? If the answer is yes, ask about this credit.

Take some classes online. Your college probably offers online courses, or you may be able to transfer in credits from a community college. These courses are less expensive and decrease your indebtedness.   Look at ways to shave a semester off your time in school. A bit here and there saves the cost of room and board which is a significant expense. If you want to help your school by spending more time there, consider saving the money and donating it to the school instead.  If you are attending Bible college a large portion of your tuition is covered by donations raised by the school president who is constantly traveling about the country and raising funds so you can get an education.  If you are going to remember someone special at Christmas, drop him a  card.  In fact, thank the entire staff. They are earning less than you think so you can prepare for ministry.  In doing so they are helping to pay for your education.

If you are a senior or have graduated, be of good cheer. Having walked through this with other graduates there is indeed hope. I will post on debt reduction strategies for the graduate tomorrow.

Remember this regarding that mountain of debt: faith and faithfulness will ensure it does not stand in your way.

 

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