Stories of college graduates struggling to deal with their student loans are enough to scare away any bright-eyed college hopeful.
If you’re thinking about college or in school right now, there are plenty of steps you can take to help reduce the amount of student loan debt you’ll be saddled with after graduation.
Reducing student loan debt while you’re still in school: 15 ways
1. How to avoid college debt: Take time to save before going to college
There isn’t any rule that says you have to jump straight from high school to college. While some people believe that a year off reduces the chance you’ll actually go to college, as long as you have the determination, a year off doesn’t have to affect you.
In fact, consider applying to your school of choice, but deferring your enrollment, so you know it’s there waiting for you. If you work your butt off and save from the summer after senior year through the next summer, you’d have a nice chunk saved for college to reduce the amount of loans you’ll need to take on. Plus, it could also give you time to think about what you want to major in so you’re not bouncing around wasting time and even more money.
To stay on track, you can still meet with an advisor and start thinking about what classes you’ll take.
2. Choose an affordable college
When you’re choosing the college that’s right for you, there are many things to consider. You’ll want to be certain the school offers the course of study you’re interested in and has a good program. You’ll also want to consider location, what class size you’re looking for, and what the atmosphere is like on campus. But many college-bound students don’t consider choosing a more affordable college experience.
Generally speaking, a public university is going to be cheaper than a private university, and in-state tuition is going to be cheaper than going to an out-of-state school. Taking classes at a community college for two years before transferring to a bigger school is also a common budget-friendly option.
There are other financial factors to think about when determining which colleges are more affordable than others as well. Consider cost of living in the area. You’ll end up spending more on off-campus rent, food, transportation, and entertainment at University of Illinois at Chicago (near downtown Chicago) than you would at Illinois State University (in Bloomington, Ill.)
There are other big financial issues to consider, too. Will you need to purchase or own a car to get around? Gas, insurance, and maintenance can add up fast. Are there opportunities for employment, either through the school or in the community? How much it will cost you to travel home for holidays and breaks? The University of Hawaii is less appealing after you search for plane tickets home around Thanksgiving.
3. Fill out the FAFSA
One of the best things you can do to limit your loans is to fill out the FAFSA before every academic year. This is your chance to get grants from the government and qualify for federal aid, including federal loans — which will most likely have a lower interest rate than private loans and come with a variety of other benefits, including the possibility of loan forgiveness and more manageable payment plans.
The FAFSA is also used to determine whether you’re eligible for work-study, a program offered through your college where you can work part-time to offset tuition costs. These jobs are often on campus or nearby and are geared towards workers with a class schedule.
4. Reducing student loans: Apply for scholarships
Scholarships are free money that you can get from organizations or your school. Regardless of what year you are in school, you should be searching for scholarships. Every scholarship means you’ll pay less in tuition and take on less debt in student loans. You can search for scholarships at your college (visit the financial aid department), within any professional fields you’re interested in, through organizations in your community, and any other groups or affiliations you’re involved with.
5. Search for grants
Grants are similar to scholarships in that they are free money — you do not have to pay them back. Check your state government and other organizations for grants.
6. Meet with an advisor regularly
You should talk with your faculty advisor to make a game plan for your college courses. This will help you take the appropriate classes at the best time. If you end up taking a class that doesn’t count toward your degree, you may have literally wasted thousands of dollars.
Besides avoiding unnecessary classes, you might need to take a particular class at the right time. As you may know, or find out soon, some required classes are only offered during a specific semester. And to complicate things a bit more, many classes have prerequisites — lower level courses you’re required to have completed beforehand. You don’t want to have to wait around an extra semester just because those last couple of required classes weren’t offered when you needed to take them.
7. Graduate early
Most schools allow full-time students to take between four and six classes per semester, at the same full-time tuition rate — five classes is typically the sweet spot if you want to graduate in four years. If you take an extra class each semester, though, or if you entered school with some AP credits and plan your schedule carefully (see No. 6), you could graduate a semester early, cutting your total college tuition bill by 12.5% and potentially saving thousands of dollars.
You may miss out on some fun senior year, and it will mean more work — if the extra course load is too much to keep up with, it’s not worth sacrificing your academic record. But if you feel like you’ve gotten everything you need to from your college experience, there’s no sense in paying full tuition for another semester just to wrap up some core requirements if you can get them out of the way early.
8. Borrow federal loans first
When you’re taking out loans, opt for federal first. As mentioned above, the interest rate is generally going to be lower than you’ll get from private loans, so you’ll pay less over the long run once you get out of school.
9. Work while in school
Between taking classes, studying, getting involved on campus, and squeezing in a social life, holding down even a part-time job may not be your top priority. But working can really help alleviate your debt load. Any amount you earn is money you won’t need to borrow, and the less you’ll have to deal with upon graduation.
Search for jobs on a campus job board or job listings website at your college, visit career services for help finding a nearby part-time job, or search for jobs online or in the community nearby.
Working has other advantages besides increasing your income. You’re also build your resume, which can help you score internships and jobs in the future. You’ll also learn valuable lessons in time and money management.
10. Use loans only for what is absolutely necessary
Just because it’s offered to you, as tempting as it may be, avoid taking out the maximum amount on your loans. Calculate the cost of tuition and living expenses. You’ll need enough to cover that amount. Before you turn to student loans to cover that amount, factor in what you’ve saved and the income you’re earning now.
Only use loans for what is necessary. Don’t take out extra for clothes or vacations. Those things will come in time when you are earning enough to afford them. Not only will you appreciate it that much more, but it won’t cost you double the price tag since if you’re buying stuff with loans, you’re getting charged interest.
11. Create and stick to a budget
A great way to limit your student loans is to create a monthly budget and stick to it. After you’ve paid your tuition and fees for the semester, you’ll want to calculate what your monthly expenses are. Total up what you pay for your rent, utilities, food, entertainment, cell phone, transportation costs, and anything else you spend money on. Here are some ways to trim your budget so you can take out less in loans:
Opt for affordable housing: If possible, consider living at home with your parents. While it might not be ideal and you may miss out on some of that typical college experience, it will save you thousands of dollars. Visit friends on the weekend. If that’s not an option, opt for more affordable housing options. Take on roommates to split the cost of rent and utilities.
Cut the bills you can: Instead of paying for cable, watch TV in the student lounge or stream shows for free online. Reduce your cell phone plan or change carriers for a better deal. Walk or ride your bike as much as you can. If possible, leave your car at home or even better, sell it to help pay for college. Think of all the costs associated with owning a car – insurance, parking, gas, maintenance, license plate renewal and registrations, and the actual payment. You can apply that all toward your tuition instead to reduce your student loans.
Reduce your food and entertainment costs: Ordering daily take-out can feel like the norm in college, but skip restaurants and fast food. Learn to cook simple, cheap meals at home. Have potlucks with your friends to split costs and still have fun together. If you’re in the dorm, take advantage of any meal plan that’s already included in your tuition. If you don’t have one, fill your in-room fridge with items you don’t need a stove to cook – turkey and bread for sandwiches, peanut butter and bagels, pre-washed salads and dressing, microwavable soups, pastas, and rice, just to name a few.
Use campus resources: Instead of shelling out money for paper and ink, use the computer labs at school for your printing (if it’s free). Skip the pricey gym membership and work out at your school. Reduce your entertainment budget by taking advantage of fun, free things to do on campus such as free concerts, art shows, films, and other events, or joining a club or sports team.
12. Pay interest while in school
Some loans offer the option of paying your interest while you’re in school. If this is manageable, pay it. The small amount you’re paying now can make a big difference later in the total amount you owe.
13. Spend your breaks wisely
One perk of college is that you’ll get chunks of time off. Depending on the type of school you’re attending, you may get a holiday break between fall and spring semester, a week or so off for spring break, and summer vacation.
Often, college breaks are associated with wild trips to Cancun, partying, and relaxing. If you can afford it, bon voyage!
But if you’re like most students, and student loans are going to be heavy burden, use your breaks a little more wisely. Instead, get a part-time job to save money for the next semester. During summer break, apply for internships for extra money and, critically, work experience. If an internship helps you secure a good-paying job soon after graduation, that may do more to to help with your loans than any other step you take.
If you’re heading home for summer, consider taking a few classes at a community college to save money (just make sure they credits will transfer to your primary college). If you can’t find a job or internship, volunteer. Besides helping people, you’ll have something to boast about on scholarship applications, which of course can help reduce the amount you need to borrow. Plus, volunteer experience will beef up your resume and can also lead to an internship or job down the road.
14. Keep track of your student loans
Don’t just blindly take out student loans every semester and then forget about them. Too many times college students, with just a few simple clicks, take on thousands of loans each semester.
Instead, take time to understand your loans. What is the interest rate? How much will you owe after college? Meet with a financial aid counselor to have them help you figure out your loans.
Keeping track of that debt piling up can also be the incentive you need to take on a part-time job or limit your spending.
15. Look before you leap when taking classes
As mentioned when talking about meeting with your advisor, it’s important to be certain that every class you take counts toward your degree.
Unfortunately, switching majors can force you to take even more classes, and possibly leave you with more loans. If you’re unsure of what you want to major in, take your general education or required courses first. This will give you time to check out a few different fields, research possible careers in fields that interest you, sit in on some classes of prospective majors, and meet with faculty and advisors from majors you’re thinking about pursuing.
The same is true for transferring colleges. Too often, prior course work doesn’t transfer to your new school. So try to pick the right school the first time around to avoid losing those credits.
But hey, it’s life, and you never know what your future brings. As a precaution, even if you aren’t considering a transfer right now, hang onto your course syllabuses and the contact information for the professor. That way if you do transfer at some point, you may just be able to show that a course you took had similarities to a course you’re required to take at your new school, and you might be granted credit for the class.