3 Ways To Minimize Your College Debt

If you are reading this, it is likely that you have student loan debt or are about to incur student loan debt.

With student loan debt balances soaring, your best bet is to pay off your student loan debt as quickly as possible, or better yet, stop the debt buildup by taking preventative measures.

Many graduates have to put their lives on hold because of common student loan mistakes. Avoid making these mistakes and get rid of your student loans in 3 easy steps!

According to USA Today, as many as 68% of college graduates enter the workforce with student loan debt. Our study found that the average student loan debt upon graduation is about $30,000.

To lessen the impact, follow these three simple steps to avoid accumulating unnecessary debt.

First Step: Choose the right college and fast track your graduation

Choose the appropriate college

Find out the cost of tuition, and also estimate all other costs, such as textbooks, materials, living expenses, and extra costs if you live on campus. This will be called the net price. Check out our guide to what college really costs.

Among your top college choices, look closely at cost, lifestyle, and job opportunities. Weigh the pros and cons of each college before making your choice.

If you’re trying to narrow down your choices for which college to attend, go through your top picks, and rank them by tuition. Also do some research to see if classes fill up quickly, and what alternatives are available.

Related: Where to apply to college: Seeking academic and financial suitability

The last thing you want is to prolong graduation and deal with half full semesters because your required courses are not available, and there are no alternatives.

Regardless of whether or not you get accepted into your dream college, you can also start at a community college and then transfer to your dream college.

A few years at a community college will help you raise your grades and increase your chances of getting a good scholarship or scholarship. As a bonus, this option will save you two years of expensive college fees there.

If you’re still not sure if you can realistically pay off your student loan when you graduate, a good rule of thumb is that the loan balance should not exceed your expected starting salary.

Research grants and grants and fill out your FAFSA

Before you get overwhelmed by the cost of tuition, research all available grants and scholarships from our top college choices. Find out how much you need with and without grants and scholarships.

Next, explore your options for obtaining financial aid. Before you turn to student loans, make sure you know all of your options for obtaining grants and scholarships. Fill out your FREE Application for Federal Student Aid (FAFSA) and start searching for scholarships and grants right away.

Finally, find out how much you’ll need to bridge the gap, and whether getting a job will make an impact. A job at the college coffee shop might save you a few thousand dollars, but it could also negatively affect your grades.

If you’d rather not work while you’re in college, start planning your career so that you can have a comfortable, supportive job once you graduate. Private loans should be the last resort to bridge the tuition fee gap.

A word of warning about student loans: Know what you’re getting into before you take out student loans. I’ve read horror stories of people being unable to afford daily expenses as their student loans pile up.

Know what you get when you borrow money for school. First, take advantage of federal student loans, then look to private loans as a last resort. Remember that private loans usually don’t offer the same benefits as federal student loans, such as deferral, forbearance, or forgiveness.

Create an effective graduation plan

Find out your graduation requirements and decide whether tuition fees will be calculated by term/semester or by unit. If tuition is calculated by semester/quarter, you can graduate quickly with proper planning and discipline.

Take summer classes and transferable units at a local community college to reduce costs and also offset issues with course availability. For example, some colleges allow students to take language classes that fill up easily at community colleges. This way, you make the most of your time, and also save money, especially if your school charges per-unit tuition.

Step two: Budget and save to reduce student loan debt

Create a realistic budget for your life now

You want to enjoy the college experience, but you don’t want to get bankrupt in the process. For nights out, find places where you can get good deals on food and drinks to reduce expenses while eating out.

While you are in school, reduce your living expenses by either living at home or renting an apartment off campus rather than living on campus. Decide how to plan your meals and live well ahead of time. Set aside money while you’re in school, whether it’s from a job or financial aid.

To get started, create a realistic college budget. List all of your income, including financial assistance, income from jobs, or your parents’ contributions.

Next, list your expenses, starting with necessities such as tuition and fees, books, rent or housing, food, groceries, personal items, utilities, transportation, and health insurance. Include all credit card minimum payments and debt in your budget.

Use most of the remaining money to pay off your student loan. If you have a negative number, you will have to readjust your budget so that your income covers all your expenses. Your budget should plan for emergencies, car maintenance (if you have one), and larger expenses like a new laptop or a vacation.

If you are already out of school, determine how much you need to pay back, and then create a budget. Calculate your income and expenses and see how much you have left. Include the minimum payment in your budget. Use most of the extra money to pay off your loan.

Save for the future

Whether your income consists of student loans, help from your parents, or your salary, you need to create good money habits from the start. Start by depositing at least 10% per month.

Saving each month will help you create good money habits that will benefit you in your adult life and beyond.

Check out our list of the best budgeting apps to get started.

Step Three: Increase your income and pay off the balance aggressively

Pay tuition fees in installments while at school

If you are able to pay the tuition fees, pay them in installments to avoid losing money all at once. The setup fee or convenience fee will likely be much lower than the student loan interest rate.

Work to reduce debt

If you can get paid internships, you can get work credit while still having some money to pay off student loan interest.

If you’re still in school, a part-time job can be used to replace or reduce loans. Some jobs can cover your living expenses in addition to your salary. For example, a job as a resident assistant can help cover living costs, such as room and board. However, if you’re not careful, working while you’re in school can take up the time you need to study and live a balanced college life.

If you are out of school, look for opportunities that will further your goals.

Jobs that pay off your student loans

Look for jobs that give you student loan forgiveness or perks that align with your profession. Some professions will pay off your student loans if you stay there long enough. If you’re willing to put in a few years, this is a good choice.

Prepaid loans

If you get a huge tax refund, bonus, or pay raise, don’t spend it! Use the money to prepay your student loans, or pay them off if you’re already out of school.

If you have smaller student loan balances, don’t fall into the procrastination trap. If you prepay your student loans, you are likely to pay off your student loans at a faster pace.

Pay the interest

Although you don’t have to pay student loan interest while in school, students with unsubsidized Stafford loans are not required to pay loan interest while in school, there are potential savings if you pay interest.

If you don’t pay off your student loans quickly enough, you may have to consolidate eligible student loans and make arrangements for the rest. Don’t put yourself in this position – start taking preventative measures now.

Final thoughts

Start with the end in mind. Select a college, estimate costs, and find a way to graduate as quickly as possible, especially if tuition at your school is calculated by semester or quarter rather than per unit.

Explore all of your options for grants and scholarships, then figure out how much you need to bridge the gap. Explore financial aid and calculate how much you can earn if you get a job.

Have you used any of these tips to keep from racking up student loan debt while you were in school? If you’re a graduate, have you used any of these strategies to pay off your student loans? Tell us in the comments below!

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