fewer student loans

How To Borrow Fewer Student Loans

Around 44 million Americans owe $1.49 trillion in student loans as of December 2017. That amounts to $33,863 per American on average.

No student wants to fall into the same trap.

For a student who isn’t even earning yet, that’s quite a lot to take in. Add in the fact that they may not even pay it off until they’re 41, and it’s even more intimidating.

However, it’s not really a requirement for a college student to bury themselves in debt. There are now a lot of options that will help a student remain debt-free or at least keep the debt to a minimum.

Want to know what these options are? Read on and find out!

Apply for Scholarships and Grants

The first things you should look into are scholarships and grants. These are essentially free money, unlike student loans that you’ll have to pay back later on (with interest!).

You will find scholarships everywhere: the federal government, the university, and off-campus organizations. If you can prove that you’re in financial need, you will find lots of opportunities.

Also, don’t stop looking even after classes have started. There are many programs that are available for non-freshmen as well.

Think How You Can Save on Other Costs

When you’re in college, the tuition fees aren’t the only expense you need to worry about. There are the living expenses consisting of rent, daily meals, and transportation allowance.

You can cut your expenses by choosing dorm over apartments. Typically, you won’t have to pay for utilities, and you might even enjoy the free amenities.

This also allows you to save on transportation costs as dorms are usually inside the campus. This also saves on travel time, giving you more time to sleep! There are other perks of living in a dorm, not to mention the ton of opportunities for making friends.

However, you’ll have limited freedom when it comes to making healthy meals. You can best save on meals if you make them yourself. But in a dorm, you’ll be at the mercy of the cafeteria and microwave meals.

Books are also often a cost that many fail to include in their computations. You can save on books by buying second-hand ones. Also, ask friends and relatives if they have copies of the required materials.

Choose a College According to Your Savings and Budget

If you haven’t decided on a college yet, shop around to see which ones are more in line with your budget. It goes without saying that the cheaper the costs, the less debt you’ll have to shoulder.

While researching, take into account how each college will influence the student loans. Also, you might be able to find one that’s currently near your house, which will allow you to save more.

We’re not saying you stay in your parents’ house. Although if that will work for you, go for it. You can still stay in a dorm if you want to, though.

We’re just pointing out that a closer school will allow you to save on transportation costs whenever you visit your parents. There are usually four breaks in a school year: spring, summer, winter, and Thanksgiving.

If you want to go home for each of these breaks while still save, also consider the location when picking a college.

Ask the Financial Aid Office for Work-Study Programs

When you’re done calculating your future expenses, it’s time to think of the money that will come in. If the numbers aren’t working out, consider signing up for work-study programs.

The federal government, as well as colleges and universities, offer this program as a financial aid to undergraduates and graduate students.

The school or the organization will pay you but note that you can’t work as many hours as you want. The number of hours you can work depends on the award and also often on your class schedule.

As such, the work-study program won’t get you through college alone. It’s only a means to supplement your scholarship and savings.

Depending on your arrangement with your employer, you might receive your pay in cash or by check. If you’ll work for the school, the program might pay for your room and board instead.

Look for Part-Time and Side Jobs

If you don’t qualify for a work-study award, you still have the option to find part-time jobs on your own. There are lots of opportunities even for undergraduates, like tutoring younger students, tutoring fellow college students, or working in the food sector.

There are also companies that will hire students on a part-time basis. Find a role that’s in line with your course to rack up experience while you’re still in college.

You might even find a company that will offer tuition assistance. UPS is an example, which offers up to $25,000 for your education.

Furthermore, don’t pass up on the opportunities to work full-time during breaks. Ask for more hours from your employer or find a job that’s specifically for college students on a break.

Pay Your Tuition in Monthly Installments

If you think that you can pay for your tuition, but you can’t pay for a semester or a quarter at once, look into your school’s installment payment plan. It breaks up the tuition fee so that you can pay monthly over the course of 9 to 10 months.

Although it doesn’t lessen the amount, it lessens the pressure. If you have grants, a part-time job, and low monthly expenses, you might not even have to incur a single cent of debt if you set up a budget wisely.

No student loans mean you won’t have to pay for interest rates. You won’t have to worry about debts after graduating as well. However, it does require an upfront fee, which isn’t much.

Consider Attending a Community College First

This one is a risky move, yet it might save you thousands of dollars.

A community college costs far less than a university, some are even free. For this reason, some take up their first two years in one before transferring to a university to finish a four-year course.

It’s risky because some credits might not transfer to the new school. There will also be scholarships and grants for freshmen that you’ll miss out on.

Note that not all students who took this route ended up getting a bachelor’s degree. Think of it as a detour. You should have the willpower to eventually get to the main road to reach your destination.

If you do think this is the route for you, prepare for lots of planning. You wouldn’t want to waste two years of your life.

Set a Four-Year Budget Plan

Think of college as one big event – rather than a yearly occurrence – that you need to plan out now. Consider the following when you’re crunching some numbers:

  • Current savings
  • Tuition
  • Potential income
  • Monthly expenses
  • Other expenses (i.e. books)

If your savings won’t cover your tuition fee, consider dividing it into four – one portion for every year. You can then pay off the remaining balance using scholarships and income from jobs.

Then, figure out if all of those combined will also cover your living expenses and other stuff, like books and class activities. If not, start researching for student loans that will only cover what you need to keep the debt low.

The caveat is that you’ll start earning interest for the loan in the first year of college. Another option is to exhaust your savings before taking out student loans. Of course, you’ll still have to supplement it with scholarships and such to make it last longer.

To make sure you’re making the best financial decision, ask a professional for help.

Avoid These Common Mistakes When Taking Out Student Loans

When you do have to take out loans, be careful in choosing. Avoid the common mistakes that might bury you in more debt.

Choosing Private Loans

Private student loans have higher interest rates, and so they should be your last resort. After exhausting free money, turn to federal student aid first. It has fixed interest rates and it doesn’t require you to pay while still in school.

Federal student loans also offer deferment and forbearance plans. These may not be available for private loans. Its repayment plans are also flexible and often depend on your income.

Not Understanding Fixed and Variable Interest Rates

Fixed interest rates will stay the same throughout the duration of the student loans. On the other hand, variable interest rates depend on an index. If the index changes, so will the interest rate, and so will your monthly payment.

Variable rates may start out lower than fixed rates, but they can quickly increase. After the loan period, it’s possible that you will have ended up paying more.

With that said, there’s also the possibility that you will have paid less. Review these terms carefully if you want to get the best rates.

Keep Learning About Financial Strategies

The best financial move against debt is to avoid incurring it in the first place. However, having debt doesn’t mean you’ve already failed.

Visit us today and learn to make the best financial decisions, like how to become debt-free.