Hi everyone, please welcome soon-to-be college grad and aspiring freelance writer Lauren Davidson. Lauren is going to share with us some important ways for college students to minimize student loan debt. Take it away, Lauren!
College often goes together with student loans and this is what most people think of when they hear the word and vice versa. It is important for you to understand that student loans do NOT have to be the only option to fund your dream of college, and you can minimize the amount of debt you take on. In fact, I did it and I want to share with you some of the strategies I used to minimize student loan debt.
Scholarships are a wonderful way to pay for college and help reduce student debt considerably. The thing I like most about scholarships is that you do NOT have to pay them back. Yes, I said that correctly. They are gift money and you will never owe a dime back to the organization or individual who provided you with the scholarship.
These awards come in all different sizes from a couple of hundred dollars to a couple thousand dollars. Most scholarships are easy to apply for and they will be in general categories, which means anyone can apply. I tend to focus on the scholarships within the field I am studying because competition is not as high and I have a better chance of winning.
Another method that I have used and do use, especially in the summer is part-time employment. I take on retail and side jobs to help me save up money for the upcoming fall semester. Since I do not go to school in the summer, I am able to work the entire time from the end of the spring semester to the start of the fall semester. I have been lucky enough to save up enough money for most of my tuition and books during this period, which has been a huge help to minimize student loan debt.
I enjoy this because I can pay for the fall semester and not have to worry about a thing. What I do for myself is I will use my scholarship first and then pay for the rest of the semester with cash and keep the additional cash in a separate account for the next semester. If I have enough money to pay for an entire semester, I will apply it to the fall semester and then use any scholarships I won for the following semester. It works out nicely and again enables me to minimize student loan debt.
Avoiding High Interest Loans
If you are tempted to take out a loan – don’t. Especially if it is a high interest one. The reason I say this is because it can trap you in debt. I took out a private student loan… it was my highest interest loan. Man was I mad at myself. Luckily, it wasn’t much money, but I warn you, do not make this mistake if you haven’t exhausted your federal loan eligibility. You will regret it and you will end up paying more in interest than you want to admit.
If you happen to need money for school and you must take out a loan, consider your options carefully. You may be able to get a private loan for the amount you need at a very low interest rate, but do make sure you are ready to make the payments when the time comes too.
Seeking Out Grants
In addition to scholarships, you can seek out grants. This is another form of gift money and is typically awarded by the institution you plan to go to. There are two main types of grants available, which include merit-based and financial need-based.
With merit-based grants, you can apply to them if you meet the grade requirements. With financial need-based grants, you need to prove that you have a financial need. This usually means that you are living below what is considered to be the poverty level.
Tips for Student Loans
If you do need to take out a student loan, don’t be ashamed – even I have done it. If you need it, you need it, but do not make it a habit and work hard to pay it off before the interest catches up and places you into a debt hole.
Also, think about the amount that you need to borrow and ONLY borrow that amount. The more you borrow, the more you need to pay back. Remember, the goal is to minimize student loan debt!
Last Words to Minimize Student Loan Debt
The above strategies have worked for me and they can work for you too. It is wise to try to find as much gift money as you can for college first, since it does not have to be paid back. If you do need to take out a student loan, limit the amount that you borrow and keep the amount to just what you need to pay for tuition and books.
About the Author: Lauren Davidson is a soon-to-be graduate from the University of Pennsylvania and a freelance writer looking for work.
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Financial Coach Brad says
These are great tips Lauren! I was just reading a post on a different site this morning talking about how most doctors graduate with $500k+ of student loans. It seems crazy to me.
I know, it would seem difficult, if not impossible, to pay back!
I’m less worried about doctors than I am about the person who took $10,000 in loans to attend a community college — or worse a for-profit college — but never finished. It may be a big mountain to climb, but doctors generally have some disposable income to work with; not so with someone stuck in a minimum wage job after never finishing an associates degree…
If I knew then what I know now I would have done things a lot differently in college!
Like you mentioned, it is extremely important to get as much money as possible that you DON’T have to pay back – scholarships and grants. Apply for everything!
Exactly. I personally knocked myself out applying for college scholarships. And as a result, I won several 🙂 But you’ll never get things like that if you don’t at least try!
Amir Najam Sethit says
Nice post. You give great tips and knowledge. Thank you for informatic post.
I think in this day and age with tuition as costly as it is then you need to look into getting a part time job. You really don’t want to start work life with too much debt -> it can be a huge burden.
Jill Camara says
Part-time job is the only thing that helped me pay off my huge debt. I used to work my nights off every day just to pay it back and not buy that iPhone. When I graduated, I still had around $10k to pay back so I put 50% of my monthly paycheck there. The idea of putting it in stocks would have gotten me better interest rate but I chose to get rid of the headache.
Without a stream of income, it can be very difficult to deal with loan debt.
Great article, very resourceful and informative.
Grants, working and those scholarships and you are all set. Plus I’ve seen so many people buy expensive cars, tvs, etc but complain about student loans. There are ways around it, plus you can always choose a less expensive school.