Student debt continues to rise as fast as tuition. Last year, students graduated from college with an average of $25,000 in debt. Many of them were left jobless once they entered the fiercely competitive market, which has even seasoned professionals scrounging for work. A college degree is still essential for staying competitive in the job market. Therefore, finding ways to reduce or eliminate college debt is essential for long-term financial success. Here are some ways that students entering college now (and their parents) can minimize their debt load over the next four years:
Choose Cheaper Alternatives
Unless you want to be a doctor or a lawyer, you likely don’t need to go to an Ivy League college to be competitive in your field. Many students studying in the liberal arts can get their degree from less prestigious schools — for far less money — and still be just as marketable. The key is individual academic performance. Students can save thousands of dollars by attending community college for the first two years and then transferring to a four-year school — or just choosing a two-year degree and graduating early. If community college isn’t appropriate for your degree, opt for an in-state, public school to get a huge break on the tuition. The difference between in-state and out-of-state tuition can be tens of thousands of dollars a year.
Find Scholarships and Grants
Getting free money is the best way to eliminate your debt. There are thousands of scholarships and grants available each year that can help students pay for a part or all of their college education. These awards are made available based on academic merit, financial need, group affiliation, area of study, residence, race, gender, and other personal characteristics. Awards are even made for those who are left-handed! Search online databases with your personal criteria for awards that are available to you, then apply for as many of them as you can. Every last $100 award will help you reduce the total amount of debt at the end of your four years.
Skip Private Loans
Federal Stafford loans are typically available for a much lower interest rate than private loans, which are dependent upon your credit rating. The subsidized Stafford loans also relieve students of paying interest while they are in school. However, the amount that students can borrow through Stafford loans are limited. Students should do what they can to reduce the total amount that must be borrowed in order to avoid exceeding this limit and having to take out higher-interest private loans. If private loans cannot be avoided, consider getting a co-signer in order to lower the interest rate.
Don’t Leave the Nest
One of the best ways to save money while attending college is to continue to live at home. Don’t travel halfway across the country and pay thousands of dollars a semester to live in a cramped dorm. Go to a local college (saving money on in-state tuition) and continue to live with mom and dad. If your parents don’t want to let you stay rent-free, chances are you’ll still end up paying less for living expenses than you would in a dorm. Plus you get the bonus of home-cooked meals!
Get a Job
While you’re in college, your studies should be your primary focus. However, a part-time job can easily be managed in addition to course work, and even the small income can help offset college expenses for big savings in the long run. Students who choose online courses can work even more — even continuing to work a full-time career — allowing them to potentially pay for all of their tuition and eliminate the need for any debt. Students who continue to work while in college may even be eligible for reimbursement through their employer. Many companies now offer their employees tuition assistance to help them further their careers. Check to see if your company has such a program and what the requirements are.
While college tuition will continue to be expensive, crushing levels of student debt need not be a reality for all students. Taking advantage of resources such as scholarships and federal loans, as well as working to find ways to reduce expenses by attending in-state schools and living at home can help students to reduce or eliminate their debt load. Frugal living and finding ways to reduce other personal expenses — such as buying textbooks used, cooking at home, and not going out every weekend — will also lead to better long-term financial health. Therefore, when students graduate, they can focus on building their new lives instead of trying to climb out of personal debt.
About the Author:
Bridget Sandorford is a grant researcher and writer for CulinarySchools.org. Along with her passion for whipping up recipes that incorporate “superfoods”, she recently finished research on.
3 Comments
I ignored some of these which was a big fail on my part. I moved out the year I started college, I didn’t even apply for bursaries or scholarships, and my spending habits were horrible. I did, however, work full time throughout, so that helped a lot.
I definitely used many of these ideas. I worked as a librarian under the federal work study program. I was lucky to qualify for subsidized student loans, so the interest was paid for during college instead of accruing on the loans for several years.
Five years later, all of my loans have been paid off ($36,000). Woohoo!
@Amanda -What a great way to qualify for subsidized loans. I know that if college students can make the interest payments during school, they won’t accrue interest on the interest. But this is great to know!