Going to college is definitely not cheap. In fact, it seems that tuition is higher today than it has ever been. This is due to plenty of different reasons and influences, but the truth remains – most students end up having to take out student loans to make their way through college. With rising tuition, one can only assume that the student loan debt would rise right along with it. Such an assumption would be correct. Along with tuition, student loan use has increased dramatically over the last decade. This is problematic; after all, you do have to pay those loans back once you finish school.
The repayment part of a student loan is where plenty of people experience their first trouble. The generation that is graduating from college is experiencing a lackluster labor market. This is bad news for student loan debtors who are at an elevated risk of default without any optimistic job opportunities. If you are in this boat with a large majority of student debtors, then you are probably looking for ways to cut down on your student loan debt.
Luckily, there are plenty of ways to help yourself out, and you can start as early as freshman year of college or even high school. Limit your student loan debt using these tips.
#1 –Save Early for College
While you are still in high school, go ahead and start saving for college. While your parents may have some money set aside for a college fund, chances are it probably won’t be enough to get you through to getting your degree. If you don’t pick up the slack, then student loans will.
Work part time jobs while you are still in high school and set money aside towards college expenses. This will help to cut down how much you have to take out in student loans initially. Most states allow teens to work at age 15 or 16, so it is never too early to start building your work ethic. Another great benefit of working to save money in high school is the experience. This will set you up with the work ethic to hold a part-time job throughout college. Working throughout college is one of the best ways to tackle capitalizing interest on student loans.
#2 –Try to Win Scholarships
Scholarships are free money that you don’t have to pay back. They can go towards the cost of tuition which greatly reduces the need for student loans. The only hassle of a scholarship is filling out the application which discourages many people from putting in the time. This is one of the biggest mistakes any college student can make.
By focusing your efforts on scholarships before college, you can cover a significant portion of tuition. In some cases, you can cover all of your tuition with multiple scholarships. On top of this, you can win scholarships throughout enrollment in college, so the opportunities are always there.If you want to significantly limit your student loan debt, then search for scholarships on a weekly basis during high school AND college.
#3 – Refinance Your Student Loans
Student loan refinancing is an option that is offered by many private companies who offer financial services, and it is gaining in popularity and prominence. When you refinance your student loans, you are essentially lumping these loans together under a different, often reduced, interest rate. The end result is normally money saved on interest over the life of a loan.
Since these are gaining in popularity, there are plenty of private companies that offer student loan refinancing. Several lenders who offer their own student loans also offer their own refinancing service, so finding a refinancing lender is really quite easy. Plenty of resources are available online. This is one of the best ways to limit student loan debt, especially in the case of multiple loans and interest rates.
#4 – Look for Any Grants (Free Money) You May Qualify For
Another form of free money that you don’t have to pay back is a grant. A grant is essentially a scholarship, but it normally is awarded by the university or the government. Most students are eligible for some type of grant or another, either through merit or financial need. While many people fit the criteria, grants are a bit harder to qualify for since they are widely applicable to large groups of people.
Step one in terms of obtaining a grant is to fill out the FAFSA online. This government application will let you know if you are eligible to receive any sort of Federal grant. The next step would be to talk to your guidance counselor who can set you in the right direction. Guidance counselors are great resources when it comes to any sort of financial aid. Sometimes you have to get lucky. For instance, some universities award grants based on merit, but you will not find out about these until you are accepted. At the end of the day, grants are solid alternatives to student loans, but they are not as forthcoming as other options.
#5 – Look into Student Loan Forgiveness
Student loan forgiveness sounds like quite the deal, but the programs associated with this are somewhat hard to qualify for. Not all of these programs involve total loan forgiveness for that matter. The more attainable programs actually require repayment for a certain period of time before forgiving any portion of the loan balance. To sum things up, you can either qualify for total loan forgiveness or partial loan forgiveness after a repayment plan.
Total loan forgiveness is only available to people who fit certain criteria. Those who suffer death or extreme disability have a chance to qualify for total loan forgiveness. Public servants, teachers, or military servicemen are the next categories of eligible applicants for total loan forgiveness. If you do not fit these criteria, then there is a good chance that you can enroll in one of the partial loan forgiveness programs. These programs are referred to as income-driven repayment plans. Every monthly payment is taken as a percentage of monthly income. After a set number of payments, the remaining loan balance is forgiven, thus “partial” loan forgiveness.
Final Thoughts
Student loan debt is a pesky issue for anyone who wants to move forward with his or her life, and it often leads to roadblocks to important financial milestones such as owning a home or starting a 401(k). With that being said, it is never too early to start eliminating the price tag over your head. The only requirements are a bit of foresight, planning ahead, and some hard work. Before you know it, you will be on the fast track to being student loan debt free.
