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How to Reduce Your Student Loan Debt - Before You Graduate

Oct 21, 2013 Jennifer Williamson, Distance Columnist | 0 Comments

You don’t have to graduate with an enormous debt load. In fact, even though you might not be flush with cash while you’re in school, there are decisive steps you can take to minimize your student debt load before you graduate. Here are a few ideas to help make sure you don’t graduate into a crushing student debt situation.

Grants first, federal loans second, and private loans third—if you have to

Try to get as much of your college financed by grants and scholarships as you can. Search online at sites such as FastWeb and The College Board for scholarships you qualify for, and apply for Pell Grants. Once that option has been exhausted, take out as much in federal loans as you can—and be sure to ask if the financial aid package you’re getting from your college includes the maximum amount of federal aid you qualify for. Private student loans have higher interest rates and as little should be taken out this way as possible.

Pay down some of your loans while in school

Don’t let negative amortization happen to your student loan. That’s when your payment isn’t’ enough to cover even the new interest that accrues—a situation that can cause your student loan to snowball. Instead, pay down at least the new interest adding up during school and other grace periods.

Choose a cheaper college

There are plenty of quality public schools out there—some even ranking among the Ivy League—that will cost you much less to attend than a private school. You’ll get an especially good deal if you choose a school in-state.

Enroll in a two-year community college—then transfer for your Bachelor’s

This strategy can wind up adding as much as a year to your college career. However, studies show that even if you take five instead of four years to graduate, you’ll still come out with less debt than someone who stayed all four years at a private or for-profit school.

Don’t use student loan money more than absolutely necessary

Avoid using student loan money for living expenses. Instead, get a campus job. Choose more affordable housing options. Stick to the school meal plan rather than eating out. Do whatever you can to cut costs—and don’t use any of your student loan money for living expenses unless the situation is dire. Bear in mind that for every dollar you spend for your student loan, you may wind up paying as much as $2 back.

Get a job. True, having a job can make it more difficult to focus on your studies

But having a huge student loan to pay off can make it more difficult to focus on your life. Get a job during school and during the summers to save up spending money during the year—so you won’t have to use your student loan for living expenses. If you have extra, pay it toward your student loan.

Graduate early

Graduating early isn’t easy, but it’s doable. Even if you’re paying the same amount for tuition under this plan, you’ll be able to enter the workforce—and start paying off your student loan—sooner. Some schools offer discounts for summer credits. Whatever you do, don’t let yourself get so behind that you have to graduate late. That will definitely make your student loan bill bigger.

Stick with one major

True, college is a time to explore. But all that exploration has a price tag. Once you choose your major, stick with it—and avoid making a costly mistake that could cause you to graduate later than intended.

Reducing your student loan debt isn’t easy while you’re in a traditional or accredited online college. But it’s doable. Do your best to keep your interest from accumulating while you’re still in school and during grace periods; avoid taking out loans for living expenses or anything else besides loans; and get the most in grants, scholarships, and low-interest federal loans possible before taking out private loans. The choices you make in college can make a big difference in your student loan bill later—as well as in your life.



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