Tips For College Students Wanting To Stay Out Of Debt
Student loans can ruin careers. The Economist reported that student loan debts ran up to $1.2 trillion in the U.S. with 7 million debtors in default. Don't get crushed under the weight of student loan debts.
Staying out of debt is a tricky situation when your employability (i.e. getting a college degree) is predicated on taking on huge amounts of debt in the first place. However, having an awareness to your current and future financial situation is not enough to hoist yourself out of a bog of debt. You'll need to be aware of all of the borrowing programs available from the government as well as from your university, you'll need to keep an eye out for scholarships and learn how to budget, and finally, you have to balance your life as a college student with your financial obligations.
Luckily, you can break down the problem of student loan debt into smaller, more manageable goals to lead to the best financial outcomes. Let's review some of the major ways you can do just that.
Explore and Take Advantage of Your Options
Depending on school rank and whether or not you are attending a private school, the average cost of tuition can range from around $24,000 to $49,000 a year. That's a lot to expect someone who doesn't even have an income and is just getting introduced into the job market as a prospect to be able to handle. In comparison, the average American under 65 is making just $46,409 per year.
On top of tuition you usually also have to pay for a variety of other day-to-day conveniences, room and board, and for your textbooks. To survive as a student, you'll need as much help as you can get, and your university and the federal government are two surefire institutions to consult about debt.
Regarding the federal side of things, there are a few types of federal loans that you can apply for including direct subsidized and unsubsidized loans, Direct PLUS loans, and Federal Perkins Loans. The conditions and amount of lending for each are outlined as part of the federal government's student aid programs . Depending on how you want to structure your debt, you can mix these federal options with debts from private financial institutions as well.
Another popular option that can easily contribute about $4,000 to $5,000 per year towards your student loans is the Federal Work-Study program, which allows students to work jobs on campus in exchange for a payment. The government subsidizes a number of campus jobs so that the university is willing to allow for some positions to be exclusively filled by students. This way, you can add something to your routine that will directly contribute to lessening the total amount of debt you have to pay at the end of your college career.
On the institutional side, a number of universities offer need-based grants to certain students than can significantly cut debt. Many universities explain how need is calculated. If you just Google for need-based grants at your university, you will likely find a nice page with relevant statistics and contextual info to help you apply like in this example for Vanderbilt University.
Between Federal loans, a work-study program, and university need-based grants, you will probably be able to knock out a majority of your debt or at the very least make it a lot less intimidating to deal with.
Scholarships and Proper Budgeting
These are the action-based aspects of staying out of debt. This section stresses looking for what's available for you to mitigate the amount of debt you take on right off the bat. This section highlights what actions you can take that will directly contribute to big cuts in the total value of your student loan debt.
Primarily, you'll want to search for merit-based scholarships. Your school probably offers them based on your major as well as your GPA. Aside from these types of scholarships, you might want to think about the types of talent you have and try to see if there are any competitions that offer a prize in the form of an academic scholarship.
The key to obtaining scholarships from outside your school is to regularly complete a lot of them. Obviously, give your best effort for each one, but your chances of getting any one scholarship will go up simply based on the volume and quantity of your applications. Check out scholarship aggregation sites like UNIGO or ask your college career advisor to get more details.
Proper budgeting covers a lot of topics, but a general thing you'll want to do is to keep track of your expenditures using a program like Mint or You Need a Budget. These softwares will help you locate where you're wasting the most money so that you can curb your spending behaviors on a month-to-month basis. Aside from that, you'll also want to look into self-credit repair and take full advantage of paid internships - if you can land one - during the summer to further offset your living costs and to build up some savings that you can use to pay off your student debt.