Anchor: Welcome back to KCCI. It’s 6:24 now. We’re here with Kurt Pearson from Compass Financial. And we’re talking about back to school time and unfortunately that comes with student loan debt.
Anchor: These stats are crazy, Kurt. We’re talking about something like 43% of graduates we understand are delaying life decisions like getting married or buying a house becuase they’re paying off their loans. What’s behind this and how can we avoid it?
Kurt Pearson: Well, student loans are kind of the perfect storm because parents have this goal and somewhat of an emotional decision. “I want to provide the best education for my kids,” right? Nothing wrong with that. But then you tag that along with how easy it is to get a studen loan to pay for college, and all of a sudden it’s “Hey we can’t afford it or not quite all of it. We can just borrow the money and think about paying it back later.” So that’s how we get into this situation. Sometimes it’s easier perhaps to take out the loan in the kid’s name and then kid graduates from college and then “Oh, what’s this?”
Anchor: For the college student headed to campus in just a few weeks now, any advice for how they can safeguard against accumulating so much debt?
Kurt Pearson: The sage advice is beginning with the end in mind. What you want to do is map out your gameplan far in advance so you kind of know “Hey we have to borrow about half the total cost of the college. Well if we borrow half, what will that end up being in total balance at the end? What will our monthly paments be when we’re finished? And given the kid’s major and so forth, what will the annual income be in a starting position?” You know if you’re looking at a $3000 a month salary and you begin deducting off rent and some mode of transportation, and a little entertainment pretty soon there’s not a lot left. So you really want to begin with the end in mind. That’s the best advice for someone heading there, and then of course have the kids have some skin in the game as well with part time work or potentially summer jobs that can help offset some of the big expenses.
Anchor: It’s an emotional decision but you have to think about it financially and you have to think about it early while your kids are young, like saving early.
Kurt Pearson: Very true.
Anchors: Ok, thank you Kurt. Thank you for those tips. Great tips. If you have any questions for Kurt about money, about college or anything else, give him a call at Compass Financial. That number is 327-1020.