If you’re reading this, you probably either student loan debt or you are about to incur student loan debt.
With student loan balances on the rise, your best bet is to pay off your student loan debt as quickly as possible, or better yet, prevent debt from piling up by taking preventative action.
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!
To minimize the impact, follow these 3 simple steps to prevent unnecessary debt from piling up.
Step One: Pick the Right College and Accelerate Your Graduation
Choose the right college
Find out how much tuition will cost and also estimate all other costs, such as textbooks, materials, living expenses, and additional costs if you live on campus. This will be called the net price. Check our guide to the real cost of a college education.
Among your top college choices, carefully consider cost, lifestyle, and career 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, take a look at your top picks and rank them by tuition. Also do some research to find out if classes fill up quickly and what alternatives are available.
The last thing you want is to prolong graduation and deal with half-full semesters because your required courses aren’t available and there’s no alternative.
Whether or not you have been accepted into your dream university, you can also start at a community college and then transfer to your dream university.
A a few years at a community college will help you improve your grades and increase your chances of getting a good scholarship or grant. As a bonus, this option will save you two years of expensive college tuition.
If you’re still not sure you can realistically repay your student loan after graduation, a good rule of thumb is that the loan balance should not exceed your expected starting salary.
Fellowships, Grants, and Completing Your FAFSA
Before you get overwhelmed by the cost of tuition, research all available grants and scholarships from your top university picks. Find out how much you need with and without grants and scholarships.
Next, explore your financial aid options. Before you turn to student loans, make sure you know all of your grant and scholarship options. Complete your free request for Federal Student Aid (FAFSA) and immediately start looking for scholarships and grants.
Finally, consider how much you would need to fill the gap and if having a job would have an impact. A college cafe job could save you a few thousand dollars, but it could also negatively impact your grades.
If you prefer not work while in college, start planning your career so you can have a comfortable job that supports you after you graduate. Private loans should be your last resort to bridge the tuition gap.
A word of caution about student loans: know what you’re getting into before you take out student loans. You’ve read horror stories of people being unable to afford day-to-day expenses as their student loans pile up.
Know what you’re getting into when you borrow money for school. First, use federal student loans, then review private loans last resort. Remember that private loans generally do not offer the same benefits as federal student loans, such as deferment, forbearance, or forgiveness.
Create an effective plan for graduation
Determine your graduation requirements and whether tuition is calculated per semester/quarter or per unit. If tuition is calculated by semester/quarter, you can graduate quickly with the right planning and discipline.
Take summer courses and transferable units at a local community college to reduce costs and offset course availability issues. For example, some colleges allow students to take language courses that easily fill up at community colleges. This way, you get the most out of your time and also save money, especially if your school charges per-unit tuition.
Step Two: Budget and Save to Minimize Student Loan Debt
Create a realistic budget for your life now
You want to enjoy the college experience, but you don’t want to go broke in the process. For nights out, find places where you can get great deals on food and drink to cut down on your dining out expenses.
While in school, reduce your living expenses by living at home or renting an apartment off campus rather than living on campus. Decide how to plan your meals and live well in advance. Set aside money during your studies, whether it comes from a job or from financial aid.
To start, create a realistic college budget. List all of your income, including financial aid, employment income, or contributions from your parents.
Next, list your expenses, starting with necessities such as tuition and fees, books, rent or room and board, groceries, utilities, personal items, transportation and health insurance. Include all minimum payments for credit cards and debts in your budget.
Use most of the remaining money to pay off your student loan. If you have a negative number, you will need to redo your budget so that your income covers all of your expenses. Your budget you need to plan for emergencies, car maintenance (if you have a car), and larger expenses such as a new laptop or a vacation.
If you’ve already left school, figure out how much you need to pay, 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 comes from student loans, help from your parents, or your salary, you need to create good financial habits from the start. Start by storing at least 10% per month.
Saving every month will help you create good financial habits that will benefit you in your adult life and beyond.
Step Three: Increase Your Income and Pay the Balance Aggressively
Pay tuition fees in installments during your studies
If you are able to afford the tuition, pay it in installments to avoid losing money all at once. Even the setup fee or convenience fee will likely be much lower than the student loan interest rate.
Work to minimize debt
If you can get your hands on a paid internship, you can get credit to work while having money to pay student loan interest.
If you are still in school, a part-time job can be used to replace or reduce loans. Some jobs may even cover your living expenses in addition to your salary. For example, a job as a resident assistant can help cover living expenses, such as room and board. However, if you’re not careful, working while you study could take the time you need to study and have a balanced college life.
If you’re not in school, look for opportunities that will allow you to achieve your goals.
Jobs that pay off your student loans
Look for jobs that offer student loan forgiveness or concessions related to your business. Some professions will even pay off your student loans if you stay there long enough. If you’re willing to put a few years into it, it’s a good choice.
Repay loans early
If you get a big tax refund, bonus or pay raise, don’t spend it! Use the money to prepay your student loans, or pay them back if you are already out of school.
If you have smaller student loan balances, don’t fall into the procrastination trap. If you pay off your student loans early, you are more likely to pay off your student loans faster.
Although you do not have to pay interest on student loans while in school, you, students with unsubsidized Stafford loans, are not required to pay interest on loans while they are in school. school, there are potential savings if you pay interest.
If you’re not repaying your student loans quickly enough, you may have to consolidate your eligible student loans and make arrangements for the rest. Don’t put yourself in this position – start taking preventive measures now.
Begin with the end in mind. Decide on a college, estimate costs, and find a way to graduate as quickly as possible, especially if your tuition is calculated per semester or quarter rather than per unit.
Explore all your grant and scholarship options, then find out how much you need to fill the gap. Explore financial aid and calculate how much you can earn if you find a job.
Have you used any of these tips to keep your student debt from building up while in school? If you graduated, did you use any of these strategies to pay off your student loans? Tell us in the comments below!