5 Ways to Keep Your Student Loan Debt Manageable
The harsh reality is that most college students are unable to graduate without some financial aid. Worse still, a growing number of college students are completing their studies with huge debt that lingers like a millstone around their necks. Even after graduating, most students struggle to land high-paid jobs from the word go.
Entry-level vacancies are still typically occupied by graduates, taking their first steps on the career ladder.
Of course, what that means is that those students on entry-level salaries will struggle to pay back their student loans, particularly if their repayments are sizeable.
The likelihood is that those repayments will be large when you consider that the average US college student carries over $30,000 in student loan debt at the end of their studies. It’s a figure that’s crept up alarmingly in recent years.
|In 2005, the average college graduate left college owing $18,529, according to data from the Project on Student Debt. Estimates from Edvisors.com claim the average graduate’s outstanding debt in 2015 had soared to $35,051.|
Fortunately, there are ways for prospective college students to mitigate their student debt issues. If you want to go to college but you’re desperate to reduce your borrowing burden, here are five strategies to keep a lid on your student loan debt.
Choose a Cheaper College to Reduce Your Debt Burden
The first and simplest way to minimize your student loan debt is to enroll at a less expensive college. Before you set your heart on a college, start comparing potential colleges based on the net price of their courses. The net price can be calculated by finding out the difference between the total cost of your attendance and the available grants or scholarships. The net price will be the figure you and your family will need to cover from personal savings, student loans or income from work.
A growing number of students are choosing to enroll at in-state public colleges. Edvisors.com states that those who graduate with a Bachelor’s degree from an in-state public college as opposed to a private non-profit college come out from their studies with 20% less student debt. Studying in your own state also makes it possible to remain living at your family home, keeping living costs down in the process.
Consider Making In-School Repayments
Although most student loans have a six-month grace period after graduation before minimum repayments are owed, it’s possible to start repaying your loan whenever you like – even in the midst of your studies. There’s no better way to get a jump start on your student loan debt – and to save thousands of bucks in interest – than to start making repayments as soon as possible.
Some college students secure part-time employment alongside their studies, using this income to start paying off their student debt. As we’ve already touched upon, making in-school repayments greatly reduces how much interest you pay overall on your loan. It will also lower your monthly repayments when the time comes to get a full-time job and repay your student loan alongside.
Seek Financial Aid From Your College
Before you make any significant commitments to a college course or a particular college, it’s important to do some research into whether there are any grants or scholarships available to you. Consider grants and scholarships as “gift aid”. They don’t have to be repaid to the college. They are given to students on behalf of employers, individuals, private companies, non-profits and local communities, providing the opportunities of college education to a broader demographic of young people.
Some colleges and universities will offer college-specific aid to applicants who meet academic or personal achievement criteria. The Free Application for Federal Student Aid (FAFSA) can also help prospective students from low-income families to get financial aid after FAFSA’s analysis of your family’s income and assets. Pell Grants are particularly popular need-based grants, awarded by the FAFSA, giving grants to students with combined family incomes of less than $25,000.
Commit to Curbing Your Living Expenses
If you are seeking a student loan to cover more than just your college tuition fees, it’s a very good idea to assess what you can do to limit your outgoings outside of college. This could mean staying at the family home during your studies to avoid the costs incurred of living on campus that will eat into your student loan.
You might also need to make thrifty sacrifices such as renting your college textbooks as opposed to buying them outright. It’s a sensible choice given that you’re never likely to read them again once your semester is over. You could also take full advantage of any meal plans included in your studies on campus to limit your day-to-day expenses on dining out.
Guesstimate Your Future Salary Before Borrowing
Before you dive in at the deep end and commit to a student loan and a college course, it’s important to assess whether you will be able to afford the loan repayments later. Obviously, it’s not easy to get a truly accurate figure on this, but you can get a picture by assessing the average starting salary for jobs you might like to do after graduation.
It goes without saying that your student loan must be somewhat lower than what you are likely to make each month. If you are likely to borrow more than you earn – at least in the early stages of your career – you may wish to seek an income-based student loan plan, but you are more likely to incur interest over the long term this way.