Things to Ask (or figure out yourself) Before Borrowing Student Loan Money

In tough economic times, people often think “I need more education…” and this is not necessarily a BAD thought to have, but a word of caution.

Before you take the leap and agree to ANYTHING (on the phone or in writing, online or paper), stop and do the math.

OK, you say – the “math” says that I will make more in my lifetime if I have a degree! That’s enough “math” for me! But I still say – WAIT!

There are MANY questionably-scrupulous institutions out there who are more than happy to take your name, phone number AND social security number and apply it to your access to student financial aid in the forms of grants and loans, and while SOMETIMES this results in new skills, and a new career and paycheck, increasingly this is a quick trip down debtors lane.

Your money – choose your college wisely

Across the nation, public community colleges offer certificate, diploma and degree programs at costs MUCH lower than the schools that advertise on late night TV, and they are much more likely to have a good reputation in the community and profession you are studying which means employers are more likely to want to hire the community college grads!

As an example, a number of the for-profit (in-class and online) “universities” charge around $30,000 for an Associates (2-year) degree. You can complete these degrees in a VERY short period of time, but consider this: you can attend your local community college and earn the same degree, have a better chance at learning important skills in an accredited program*, AND spend about 80% LESS than at the schools who advertise on late night TV.

Some people complain that the classes in the Community College are full and it takes a long time to get in. OK, still I say – do the math. Let’s look at a degree in medical billing and coding. This is one that I get a lot of SPAM email about so it must be popular.

Medical Coders can make up to $45,000 a year, but these are experienced coders with a number of years of inpatient coding experience under their belts and most of these coders will have a credential from the American Health Information Management Association (AHIMA). Many (many!) for-profit programs teach “Coding” but it is more likely the outpatient variety, which is not going to get you in the door to the $45,000/year coding job -AND- will not allow you to sit for the AHIMA credentials (AHIMA requires that the program of study be AHIMA/CAHIIM approved)

So, let’s say – for the sake of argument – that you decide that working as Medical Biller is what you want. Many community colleges offer this as a certificate or degree program, so let’s assume you’re looking at it from the associate’s degree (2-year) perspective, and let’s compare how this will pan out depending on which option you choose.

Community college degrees can often be completed for far below $10,000 including tuition, books, fees and everything. In fact, at the Northern Virginia Community College outside of Washington DC in one of the nation’s most expensive areas to live, you can earn an associate’s degree for around $8,500. In my area it is closer to $6,500 and it will vary by state, but when compared to the $30,000 price tag at the for-profit institutions, even $10,000 is a bargain!

Hint: employers don’t care how much you paid to get that degree – they’ll pay you the going rate.

Medical billers make a median salary of $30,000 in the PA-OH-WV region. Entry-level billers (e.g. new grads) will make slightly less.

Now, consider this:

If you borrowed $30,000 for that Medical Billing education, at the going interest rates you will be expected to pay just over $300 a month on your student loans. If you attended the local community college, and borrowed the entire tuition cost of $6,500 you’ll be paying loans back at the rate of around $65/month (information obtained from US Department of Education, FAFSA site).

Working as a Medical Biller you can expect to bring home (after taxes, etc) around $1,750 a month. Think about what you spend on Rent, Utilities, Transportation, Food (good GRIEF the cost of groceries, lately!!), Cable/Internet, Clothing, Credit Cards,…etc. NOW, in what you have left over after paying those known bills, would you rather pay out $300+ in student loan payments, or $65 in student loan payments?

For me, that’s a no-brainer! (it should be for you, too)

If you’re anxious to get into that program but the Community College classes are filled up, stop and “do the math“, then work some extra hours to pay for your books next semester, or even consider driving to the next county to take the class, or taking it online at another public community college or university. At the end of the day, you and your family will be better off even if you ended up waiting an extra 2 years to finish the community college degree!

Don’t let the high pressure sales tactics at some institutions derail your future. Know the truth, and do the math!

* any college or university that is eligible for federal financial aid must be accredited, BUT – accreditation of the entire school is DIFFERENT than individual program accreditation, and in a lot of the higher-paying professions (e.g. health care, information technology) the accreditation of the PROGRAM is what makes the graduates eligible to sit for important credentials after graduation that open doors to new jobs and higher pay.

When talking to ANY college or university, ASK ABOUT PROGRAM ACCREDITATION, not just institutional accreditation.

Questions? Need help understanding the complexities of college admissions and financial aid? Leave a comment with your email address and I will do my best to either answer your questions, OR find a resource for you.

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