How to Reduce Student Loan Debt
Tips to Help College Students Graduate With Fewer Loans
Graduating college with thousands of dollars of debt is not the ideal way to begin your life in the working world. Here are some tips on how to graduate with less debt.
According to NellieMae, a prominent student loan company, the average U.S. college student graduates with $18,900 in student loan debt. The average monthly student loan payment has skyrocketed to over $250 a month.
When a young person is just getting started in the workforce, this can be quite a financial burden. Student loans may seem like an easy solution when you take them out, but years from now, your accumulated student loan payments may become a significant drain on your finances. As you finance your education, take the time to consider smart strategies to help reduce your dependence on student loans. Live frugally now, and you'll enjoy the benefits later.
Here are some tips on cutting your dependence on student loans.
Choosing a College Wisely
When narrowing your college search, weigh cost carefully. Will the benefits of attending a significantly more expensive school outweigh the costs-- including future loan payments? Take the time to consider what you really want and need from your college experience, and look for the school that can satisfy those needs the most cheaply. It can be tempting to follow your heart and choose a pricey school because it just feels like the right choice, but make sure those feelings are backed up with logical financial considerations.
When calculating the potential cost of a school, don't forget to consider cost of living. Expenses such as rent, car insurance, gas, utilities, and even food prices increase your dependence on student loans. An expensive school in an inexpensive geographical area might not be all that more costly than an inexpensive school in a pricey geographical area.
In addition, consider proximity to home. If attending a school means frequent plane tickets or long drives, those costs can add up. And of course, living at home can cut your costs down dramatically. If that options seems reasonable for you and your family, it just may be worth a try.
Of course, no matter where you go to school, you'll save yourself thousands of dollars if you graduate on time. Here are some tips for how to graduate in four years.
College Student Money Saving Tips
Being a poor college student sucks. But being a poor thirty-year-old who can't afford mortgage payments because of student loan debts is much worse. Live cheaply now so you can get yourself off to a good start financially, and you'll enjoy the benefits for years to come.
Here are some strategies that can cut thousands of dollars from your student loan debt.
- Get by without a car, or use the car you have as little as possible. Student auto insurance, gasoline prices, and parking add thousands of dollars to your annual expenses.
- If you can buy something used, do it. Thanks to thrift stores, garage sales, and eBay, it's easy to get almost everything preowned: clothing, college textbooks, electronics, furniture, household goods, and pretty much everything a student needs. Don't be a snob. Buy secondhand things now and it will be much easier to buy whatever you want later.
- Avoid eating out. If you have your own apartment, learn to cook basic meals. If you live in a dorm, stick to the meal plan as much as you can and stock your room with some basic groceries for snacks. And nix the expensive coffee drink habit! Buy yourself a coffeemaker and save those venti mochas for special treats.
- Avoid excessive alcohol consumption. There are plenty of reasons not to binge drink, but one of the most overlooked reason is the expense.
- Avoid expensive trips. If you're going to travel, stay in student hostels and pay close attention to setting a budget. Consider cheaper travel alternatives, like these cheap ideas for Spring Break.
Other Financial Aid Options
Finding other ways to finance your education can help quite a bit. It's worth your time to investigate scholarships and grants on the national and local level. Here are some tips on how to search for college scholarships.
If you need help financing your education, schedule a meeting with someone in the financial aid office. There may be more resources available to you than you realize. And if you're a member of a racial, religious, or sexual minority group, stop by the campus organization that represents your group to look for special financial aid opportunities.
One of the main things students can do to cut their loan dependence is to work in the summer or during the semester. Of course, working too many hours can make it more difficult to graduate in four years, so you may need to find a good balance between working as many hours as you can while maintaining a reasonable course load.
Student loans are a harsh reality for most American college students, and you may not be able to escape this burden entirely. However, by making smart financial and academic choices, you can cut your loan dependency and begin your financial future without excessive debts.
