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How the debt load figures into picking a college

Last Updated Jan 3, 2017 5:50 AM EST

As the year begins, the clock starts ticking for families sorting through college choices.

In addition to picking the school that offers the best fit for a student’s personality and academic interests, you need to know how much of a debt load may be part of the package.

One way to avoid college debt is to specifically target schools that have policies to help students avoid loans. These “debt-avoidance” institutions can be quite generous, but you have to do some homework to find them.

A quick route to seeing how much debt an average student carries from a specific college is to search College Scorecard, a site run by the U.S. Department of Education. It’s hardly a glamorous portal, but it can give you some essential information. 

Although you won’t know for sure if you qualify for nonloan aid until after you apply, submit your FAFSA financial aid form. If you haven’t filed it, get going. Some grants and scholarships are first-come, first-served. 

Of course, searching for aid and debt figures one school at a time can be tedious, and you need some benchmarks to tell you if a college is indeed being generous. An online lending service called LendEdu recently crunched some numbers to show which schools are likely to saddle you with the most or least amount of debt.

Topping its list for highest student-loan debt rankings is the Berklee College of Music, based in Boston, where student borrowers take on an average $86,000 in loans.

Note: By looking at student debt loads, I’m making no judgement on the educational quality at these colleges. You can easily go to public universities and take on six figures in debt.

Of course, you have to look beyond the numbers to judge the quality of a college. Do you get more bang for your buck with some degrees over others?

Being a musician, I can tell you that getting a music degree from Berklee has some marquee value -- if you end up becoming a professional musician, which is one of the toughest gigs to make a living wage at in this country.

You also need to find colleges that deliberately attempt to steer students away from debt. A neighbor of mine, for example, went to Berea College in Kentucky, which offers most students jobs and has an average debt load of about $8,000 per student and often less. 

Princeton University is also on the low-loan list, with an average debt of $8,500. The highly selective Ivy is among a group of top-tier colleges that have generous nonloan aid packages. 

The public university scoring highest in the LendEdu rankings for least amount of debt is the University of Arkansas for Medical Sciences, with an average debt burden of $7,000.

What the low-debt colleges have in common is a focused policy to keep net costs low and to reduce or eliminate loans. In 2001, Princeton adopted a policy “to offer every aid recipient a financial aid package that replaces loans with grant aid that students do not pay back.” Most of the highest-ranked colleges have a similar policy. 

In my view, all colleges should be grant-focused and not loan-focused in their aid policy, although their generosity largely depends on how much is in their endowment and trustees’ willingness to support those with financial need. That’s what you should look for when choosing colleges.

So when your college selection comes down the the wire, a solid deciding question is “which college offers the best fit and value for the kind of education you’re seeking?”

Do they have a stated policy of providing aid in the form of grants, scholarships over loans? Will they provide additional merit aid, particularly if your family doesn’t have demonstrated financial need? Are they negotiable in sweetening a financial aid package if your family still can’t pay total expenses, which should include books, travel and room and board? 

Ultimately, a smart college choice should be based on not only value, but quality. You want a university that’s going to offer you a solid shot at getting a decent-paying position in any field. And the amount of debt that will be involved should always be part of the final decision.

  • John Wasik

    John Wasik is the author of The Debt-Free Degree and 15 other books. He writes and speaks regularly on personal finance issues throughout North America.