Q: My daughter has run out of money in her junior year. Should she take out a loan for her senior year or try to work more hours to earn more money? She really wanted to graduate debt free.
A: This is a tough question and will require a lot of evaluation and planning on our daughter’s part. If she wants to graduate without debt she can, but she will probably have to take two or three years to finish her “senior year” while she works at least full time. Before she makes her final decision though, she needs to evaluate the following:
1. How much can she earn working full time? Minimum wage in most parts of the country is still $7.25 per hour, which may or may not be enough for her to live on and also pay for school part time.
2. If she already has a part time job and can become a full time employee with the same employer, will she get a raise or benefits package that will make it worth her while to switch to full time?
3. If she can’t work full time with one employer, will she be able to work two part time jobs? Will they both offer steady, year-round employment?
4. What will her full time job prospects be upon graduation? She will need to honestly evaluate how much she can expect to earn upon graduating by researching the recent starting salaries of other students with similar GPAs and experience, from her same college and degree program. From this information she can calculate if it will be worth it for her to take two or three years to graduate while missing out on those same years of full time earnings and benefits in her chosen field.
5. If she’s a strong student in a proven lucrative major field of study, it may be better for her to take out a federal student loan for her final year and pay it off early upon finding her first job.
6. She also needs to make sure that switching to part time status will not force her to take required course work out of sequence, or make her ineligible for any scholarships, grants, work-study, or insurance policies (health or auto) she now has.
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