10 Ways To Avoid Student Debt & The 10 Best Strategies For Paying It Off Early
How To Avoid Getting Buried In Debt Right After Graduation
The dream of higher education in the US often comes with a hefty price tag. If you don't plan accordingly, that mountain of debt can follow you around relentlessly for years or even decades. Luckily, there are many things you can do to reduce that burden and establish financial independence earlier. When it comes to student debt, little strategic moves and money hacks can go a long way, all it takes is a little know-how, forward planning, and discipline. Here are 10 ways to avoid racking up student debt and 10 strategies for tickling it sooner.
1. Get A Job
Getting a part-time job while you're in school is the first, most obvious way to avoid racking up too much debt. It's also a great way to have some variety in your life and instill a sense of responsibility, and financial independence.
2. Apply For Scholarships & Awards
You don't have to be a genius to land a scholarship or award, you just have to put your head down, work hard, and apply to every available one. Even if you're unsure if you're a perfect fit, send an application anyway just in case.
3. Avoid Private Student Loans
Focus on getting a federal loan as opposed to a private one as private student loans have much higher borrowing limits. They tend to have worse interest rates and less flexible repayment plans.
4. Accelerate Your Degree
Explore if you can complete your degree in less time. A Bachelor's degree completed in three years instead of four is an entire regular year's tuition less expensive. Night school, summer school, or online courses often follow a more compressed schedule and are cheaper.
5. Budget
Create a budget for yourself and stick with it. Keeping your living expenses down while you're a student can help you avoid racking up more debt than necessary.
6. Attend Community College
Community college is a much more affordable option than traditional four-year universities. Even if you don't want to do your whole degree at a community college, you can begin at one to lower costs before transferring to your college of choice.
7. Look Abroad
This may seem counterintuitive, but given the exorbitant price of college in the US, it's sometimes cheaper to study abroad than to attend a local school. Universities in Germany or the Netherlands offer top-tier education for affordable prices, even for international students.
8. Take A Gap Year & Save
If you're worried about not having enough money to put yourself through school, consider taking a gap year to work and build your savings. Just make sure to keep your eye on the prize and avoid losing focus.
9. Take AP Or IB Courses In High School
Advanced Placement (AP) or International Baccalaureate (IB) courses which you can take in high school count towards your university degree. If you attend a public high school, you can take these courses for free.
10. Get Good Grades
Your one main job as a student is to perform well academically. Putting your head down, working hard, and earning good grades will set you up well in life. If you perform well as a student you can score a scholarship, take AP or IB courses in high school so you don't have to pay for them, and get yourself a good job which will make any outstanding loan payments easier to pay off.
Now that we've covered some of the ways you can avoid accumulating student debt, let's talk about how to tackle loan payments so they don't get out of hand.
1. Pay More Than The Minimum Each Month
If you can manage to pay more than the minimum each month, do. The more you can pay towards the loan, the less interest you'll rack up and the quicker you can make it disappear.
2. Focus On Your Career
It's tempting to just take it easy for a while after you finish your studies, but focusing on your career early will help you earn a better salary sooner. Naturally, if you earn more money, you can pay off your debts a lot quicker.
3. Get Ahead Of It
If you can get on top of loan repayment early, you'll avoid owing too much interest. If you start early, you'll also finish your payments early and be able to enjoy more financial freedom. It also may improve your credit score.
4. Cut Your Living Expenses
After you finish school, when you're just starting your career, don't be too quick to rent a premium apartment or eat at fancy restaurants each week. Continue to live modestly to account for paying off your loans and other bills, then you can start splurging.
5. Use The "Debt Snowball" Method
The "debt snowball" is a method for repaying loans by starting with the smallest balance owed, aggressively repaying it, and then moving up to the next smallest, and so on. With this method, you get to enjoy psychological wins and repay your debt off relatively quickly.
6. Use The "Debt Avalanche" Method
The "debt avalanche" method is the "snowball method" flipped, so you start with the largest balance and work your way down. This method doesn't administer the same psychological satisfaction right away, but it's better for avoiding interest.
7. Refinance Private Student Loans
You can take out a new loan with a private lender (with better terms) to pay off your original loan. You're essentially replacing your old loan with a new one to hopefully score lower interest rates, monthly payments, and a simpler repayment plan.
8. Check Out Loan Forgiveness Programs
Governments and some private organizations offer programs that forgive some or all of your loans. These programs usually involve working for some period of time in a high-need field like healthcare or in an underserved region in exchange for loan forgiveness.
9. Consider Consolidating Federal Loans
You can combine multiple debts into a single, new loan instead of making separate payments to many different lenders. Obtaining a new loan usually results in better terms and making just one payment to a singer lender simplifies repayment.
10. Understand Your Loans
The first step to paying off your debt is understanding your loans. Knowing what you owe, and identifying the principal balance, interest rate, and repayment terms will help you create the best repayment plan.
