5 Ways to Save Yourself from the Misery of Student Debt

Investment in Education

If you’re reading this, you are either about to take a student loan or you already carry a fairly heavy student debt on your shoulders. Of course, you’re not alone.

One in five adult Americans carries student debt. According to the latest report by the Federal Reserve Bank of New York, as of Q2 2019, nearly 45 million Americans collectively owe $1.5 trillion in student loan debt in the U.S. alone, with some students having debts of up to 200k in student loans. This is more than credit cards or auto loans.

Student debt is truly becoming something of a financial crisis and it’s showing no sign of slowing down. But a college education is still important and a degree certainly holds value in your CV, so you can’t really sidestep this crisis altogether.

But as a soon-to-be college student or graduate, what you can do is take steps to minimize the impact it has on your life.

Here are five tips to point you in the right direction to Minimize Student Debt

Pick your college wisely

Like every other aspirant, you have your list of dream colleges you swear by. That’s a great starting point.

Out of your top choices, carefully evaluate tuition, living expenses, and career prospects after graduation. As you know, private colleges have considerably higher tuition than public ones. While both have their pros and cons, the higher fees don’t always translate to better education, facilities, or job opportunities.

When narrowing down your preferences, rank colleges by tuition. Then, do thorough research to find out everything about your program: class size, whether seats fill up quickly, reviews from alumni, whether they received good job offers, and so on.

“Regardless of whether or not you got accepted into your dream college, you can also start out at a community college and then transfer to your dream college,” says Robert Farrington, Founder of The College Investor. “A couple of years at a community college will help you get your grades up and increase your chances of getting a good scholarship or grant. As a bonus, this option will save you two years of high-cost college tuition right there.”

Estimate total costs, not just tuition

Tuition is just the tip of the iceberg when it comes to college expenses. You need to estimate your full cost of college, which is substantially more than just tuition and fees.

“People look at tuition and think, ‘Oh, that’s what I need.’ They don’t really make a good list of all the different expenses that are involved, and then match that with various ways to actually meet those needs,” says Suzanna de Baca, vice president of wealth strategies at Ameriprise Financial.

There are several other major costs you need to factor in, such as:

  • Room and board:  According to data by Wells Fargo, housing itself can add an average annual cost of $10,440 to your tuition. Of course, it depends on whether you choose to live in a dorm or off-campus in an apartment; but expect a setback of at least $9,000 annually.
  • School supplies: These include necessities such as books and laptops, with an average annual cost of $1,250.
  • Transportation: If you live off-campus in a condo or commute regularly home, this can add up to a pretty penny.
  • Personal expenses: These include laundry, eating out, cell phone bills, insurance premiums, healthcare, and extracurricular activities.

So, make sure to take everything into account when preparing a budget for college.

Evaluate your loan options carefully

“Always exhaust federal loans before going to private,” says Sara Harrington, assistant director of academic progress and loans at the University of Iowa. Assess private loans only if federal loans are inadequate or not available. When going for private loans, keep a sharp eye out for interest rates and repayment terms. Go through this summary of the differences between federal and private student loans.

Besides, as you pass the semesters, your student loans can pile up along the way. So, you need to keep tabs on your borrowing. “It’s really important for students to be aware of how much they are borrowing,” says Sara Harrington. “Not just one year at a time, but the cumulative effect of it.”

Work part-time to minimize debt

This is not easy, but if you can land a paid part-time job or internship while in school, it can work wonders for your student debt situation.

A modest salary can help pay off interest or cover your living expenses. Not to mention a job even slightly relevant to your field of study will count as work experience and enhance your future prospects. For example, working as a freelance writer while studying marketing or journalism is an amazing way to build your portfolio while earning pocket money.

However, successfully managing part-time work and college work (studies, projects, assignments, etc.) is a tall order. If you’re not careful, you can end up hurting your grades and doing more harm than good to your CV. Furthermore, it can inadvertently serve as another source of stress, cause burnout, and restrain you from enjoying college life.

So, make sure you take up part-time work only in those semesters where you have spare time or you can work extra hours without disrupting your health and studies.

Adopt a minimalistic lifestyle

In your college days, it might be tempting to splurge every other weekend shopping with friends and dining out in fancy restaurants. While an occasional stress-buster is all right, you don’t need anyone telling you that splurging frequently is a bad idea.

Good, wholesome food doesn’t have to be costly. Shopping can be planned and thrifty instead of impulsive. Plus, do you need that gym membership? Fitness and weight-loss goals can be achieved by jogging outside instead of on a treadmill. Moreover, you can de-clutter your belongings and sell the stuff you don’t use or need anymore.

Understandably, you may not want to give up on many of these everyday luxuries and minimalism is not for everyone. But these small cutbacks can easily add up to a sizeable amount which will help you get out of debt quicker.

Final thoughts

The tips described above may be seemingly obvious to you but many young freshmen are still quite oblivious to the impact student debt can have on their future. If you wish to learn some more advanced tactics to minimize your student debt such as applying for public service loan forgiveness, signing up for Auto Pay, loan consolidation, and more, you should definitely check out this post by Credit.com’s Brian Acton.

So, what are you doing to minimize your student debt? Are you feeling burdened? Take a moment to share your tips and thoughts in the comments below. It might help someone in the same boat as you!

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