10 Ways You can Avoid the Student Debt Trap

10 Ways You can Avoid the Student Debt Trap

Seeking higher education is an essential step for professional success. The pay received by college graduates is better than high school diploma holders. Similarly, promotion opportunities are far better.

College education can last for four years or even more. It is a costly affair and needs a lot of financial commitment. Most students accumulate a large educational debt when they leave college with little resources to pay back.

The average student debt in the United States is almost $40,000, with about 2.6 million individuals owing more than $100,000. Such an amount is massive even if you have a decent job right out of college.

Most students do not have the financial muscle to fund their own college education and resort to commercial debt. However, there are ways in which the student loan trap can be avoided, and the total debt accumulated at the end of your college education can be minimized.

1. Scholarships

Try to look for local scholarships available in your area of study. Your college or university may also be offering scholarships. You're usually required to maintain a minimum GPA through the semesters to keep your scholarship. The scholarships can help you pay your college dues, and you wouldn't need any loans.

2. Financial Aid

There are several financial aid agencies at the federal level that offer assistance to students. The household incomes of students and their families are calculated to see if you qualify for them. You can utilize financial aid for paying your tuition fees, books, and residence expenditure.

Usually, there is no requirement of payback but be sure to know the rules of your program. Generally, the aid covers a part of your education if you qualify. The aid support can undoubtedly lower your student loan significantly.

You can seek the suggestions from a well learned  financial adviser on the matter. They can guide you in the right direction about your educational finances.  

3. Federal Student Loans

The government offers different kinds of student loans with varying terms and conditions. These loans may cost a bit more than commercial loans. However, there are options to reduce these loans or have them forgiven through different government programs. Most people prefer federal loans over commercial loans since they are less costly.

4. Save Before College

If you're looking to get a college degree, it is imperative to start saving for it at the right time. You do not want to be under $100,000 of debt on the first day of your job. Creating early savings is the key to lower debts in the future.  

You can work part-time during the weekend to save some money for your college as a high school student. Even a small amount can help you get through early college without needing a loan.

5. Consider a Community College

You will be studying in a four years program in most cases. It is natural to seek your degree from a highly accredited college. However, you do not need to study all four years in that institution which will cost quite a bit.

Community colleges offer the same courses for a lot less. You can spend a few semesters at community college before transferring to your desired university. You will get the degree from the university you finish your degree program at. It is an actual win-win situation.

6. Books

The Cost of books and stationery can be an awful lot throughout a college degree. It is good to buy used books directly from students as they cost a lot less than buying a new or used book from the on-campus bookstore.

You should also avoid fancy notebooks and ball pens as they serve little purpose. You can even get library books, especially if you are studying in a shorter summer session.

These savings amount to several thousand dollars throughout a college degree. While this may look like a small amount, it can be a significant reduction in your overall student loan bill.

7. Boarding

On-campus residences are pretty expensive. It is a good idea to rent an apartment with classmates or friends close to the campus. For example, if you will go to the University of Cincinnati, you should check these apartments for rent in Cincinnati as they are so close to the campus and have amenities that are very convenient, especially for college students. Ideally, you should be able to walk for classes to save on your fuel bill as well.

It is also a good idea that you do your groceries and prepare your own meals. Students typically end up spending thousands of dollars on takeaway and delivery each year. Try not to spend too much on pizza and beer, which will help you save a few thousand dollars.

8. Get a Job

Getting a job is a good way of keeping your debt to a minimum. You can also pay off the debt promptly while studying to minimize the future burden. There are many on and off-campus jobs to choose from.

There are also study-related jobs that pay reasonably well. The income from these jobs generally does not count towards the income of your student aid eligibility. These jobs are perfect for you so you can do your schoolwork along with the job. Even if you can find a decent part-time job off-campus, you should opt for it.

9. Loan Forgiveness

There are programs available that will help by partially or entirely forgiving your student debt. These involve working in far-off areas where people generally avoid employment. Some programs have other conditions, and you can look them up and see if one suits you.

10. Pay Loans Smartly

When you're paying back the loans, ensure that you take an intelligent approach. Always try to pay more than the minimum requirements monthly payment. Even a few extra dollars can reduce the monthly payment that you need to make in the future.

If you can afford to, pay significantly more than your monthly payment. You will help lower monthly payments and help negotiate with the lender about the APR by paying more. Even if you can reduce the interest rate by a couple of percentage points, it has a massive impact on your overall loan repayment.

The Bottom Line

It isn't easy to seek professional education without any financial help due to its generally high Cost. However, if you take innovative steps to pay for your education, you can minimize the need to take commercial loans.

You must utilize all available resources to fund your college education before borrowing any money. Even if you must take a loan, avoid commercial banks and seek help from government departments.

Using your better judgment and maintaining discipline, you can undoubtedly get a college degree without a mountain of debt on your back. As a college-educated person, it is a lot easier to pay back a few thousand dollars compared to tens of thousands of dollars in debt.
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