Minimize Student Loan Debt
With college costs rising faster than increases on household income, more and more students have student loans to help fund their education. Often they don’t fully understand all of the terms and fail to track the amounts they borrow. One of the best ways you can stay on top of this process and set yourself up for an easier repayment process, is to limit the amount of student loan debt you accrue. Taking out the smallest amount of money possible in loans will pay off in the long run.
Follow these tips to ensure that you limit the amount of student loan debt you accrue while still in school.
Borrow only the amount you need.
Many borrowers make the mistake of taking out more loans than necessary. To avoid doing this, create a budget to determine how much loan money you will need and avoid using loan money to pay for unnecessary expenses, such as trips to the movie theater or expensive dinners.
Consider a part-time job.
If your academic schedule allows, consider finding a part-time job on campus to help supplement the cost of unexpected expenses. Be sure to check with your financial aid office to see if you qualify for work study, which will give you the opportunity to work on campus.
Compare award letters.
Once you receive your financial aid award letter, compare loan offers by reading the fine print. If federal loans are not enough to cover the cost of your education and you are considering private loan offers, be sure to shop around for the best interest rates and repayment options.
Take college credit while in high school.
Taking AP, dual credit or college credit courses while in high school can give you a head start on achieving your intended major. Find out the general education requirements for students at the college you plan to attend and take courses that will fulfill those requirements. Doing this could set you up to graduate from college early, allowing you to borrow less in student loans.
Consider paying your loan interest while still in school.
If you start making interest payments on your student loans while you are still in college, you will reduce the total amount you’ll have to repay. Interest payments are usually manageable and by paying off interest as you go keep outstanding interest from capitalizing on any of your balances. Allowing interest to capitalize increases your loan balance essentially requiring you to pay interest on the interest that has been accrued!
Apply for scholarships.
Scholarships can pay for portions, and at times all of your education during an academic year, but you must apply! You can find scholarships that specific to your school or department by talking to a representative from your school’s financial aid office or your department chair. In addition, the following sites are just a few places you can search for scholarships.
Fast Web - www.FastWeb.com
Big Future by the College Board - https://bigfuture.collegeboard.org
Sallie Mae Scholarship Search - www.salliemae.com/scholarships
Scholarship America - https://scholarshipamerica.org/
Choose a school that fits into the family budget.
Review the financial aid packages from the colleges where you applied and consider how much you would need to borrow from each. Keep the end in mind and select a college where your loan debt can be kept as a reasonable level to your future income potential.