It is not uncommon for students, especially low-income students, to drop out of college after accumulating thousands of dollars in student loan debt. The American Association of State Colleges and Universities provides sobering statistics. Nearly one in five students who do not graduate from college leave with $20,000 in student loan debt. Borrowers who drop out earn lower incomes and face a high risk of accumulating unmanageable debt that is likely to result in forbearance, default, or even bankruptcy. When students face these financial hardships, they are more likely to require state services such as Medicaid if they are uninsured and unemployment benefits if they are out of work. The long-term burden of debt not only affects individual borrowers’ futures; taxpayers may find themselves providing additional resources to those who cannot keep up with their debt repayments. Living with unmanageable debt presents graduates with genuine fears about entering college, completing college, pursuing post-baccalaureate degrees, and choosing a career. Living with unmanageable debt presents even greater problems for those who drop out of college.

Discussing options and coming up with a plan for children currently in college is important. But for those families anticipating sending students to college in the future, coming up with a strategy for their education is just as critical, especially since amany students finish college with both educational and credit card debt. Repaying both is compounded not only by limited earnings relative to an entire career span, but also the challenge of organizing multiple accounts that the student holds. Any plan formed should be the outcome of a dialogue that includes:

• Where to apply, since applications are costly

• Local options versus schools outside of the area, since the costs of cross-country travel will add up over the course of one’s 4-5 years in school

• State versus private institutions, since tuition is typically much lower in the former

• Community college and transfer options if available, which can decrease the cost of attaining a bachelor’s degree even more than attendance at a public university for all college years

• Research on scholarships, which are numerous and relatively plentiful for students who have not yet earned a bachelor’s degree.

Considering the various options’ impacts on one’s debt status will be key in moving towards debt reduction and management. The Project on Student Debt provides helpful information on financial aid at a number of American universities and colleges.

Raj Patel writes for DebtGoal.com, a do-it-yourself system for getting out of debt and lowering your interest costs.  DebtGoal.com incorporates all of the techniques discussed in this post and can help users understand and get visibility to and manage their debt finances.