Not everyone enjoys the college lifestyle. After graduating from high school, many people go for their freshman year of college, but don’t return for their sophomore year. In fact, the National Center for Education Statistics says that only 81% of students return for their sophomore year. That’s a staggering drop! Community colleges have it even worse. Only 62% of students return the next year.
College can present many obstacles that force people to make tough decisions. It’s harder than anyone thinks to go to college full-time while at the same time working, making money, and keeping up with bills. During this time, student loan debt is accumulating wildly. Attempting to get a degree is a massive struggle that cause many to simply drop out and give up.
Even so, regardless of if you drop out or continue until the end, you’re responsible for the debt you incurred while at college. It means those courses were a waste of money that do nothing to improve your life and now you’re in debt trying to pay it off. Dropping out of college is never a good idea. There’s another reason why this is so.
College Degrees and Financial Freedom
While less people are enrolling into college these days, the benefits of getting a degree are still massive. People with a degree make a lot more money in their lifetime than those who don’t. If you drop out before getting your degree, you’re still on a path towards making less money. That means you’re stuck trying to pay the debt you incurred while not realizing your full potential financially.
The Urban Institute found that 42% of people who carry student debt have an associate degree or lower. While they have much less student debt than those who completed their courses, they are at a higher change of defaulting on their loans. That’s because they’re making significantly less money than those who have a 4-year degree or higher.
Defaulting on your student loans is not a path you should take. It will seriously cripple you financially by damaging your credit score and making it nearly impossible to do other things like buying a home or a car. If it gets bad enough, the lenders will garnish your wages and steal your tax refund until it’s paid off.
Taking Care of the Problem
If you think you’ve bitten off more than you can chew and are ready to drop-out, there are ways to handle it. There’s a process called exit counseling. Most students who have federal student loans are required to do this if they want to drop out. Exit counseling allows for the student to learn about all of their repayment options so when they do quit, they are prepared.
You do have a six-month grace period after you leave school. That will help you get on your feet without having to worry about student debt. But, whether you’re ready for it or not, that six-month grace period will end and you’ll be responsible for your loan. You could delay it even more with deferment, but your interest will still accumulate and it will increase your debt further.
Interest also accumulates during the grace period. That’s why you should start making interest payments immediately. Waiting until the grace period is over will also grow the debt you owe, making it more difficult to handle. It’s going to require you to be completely responsible and on your game.