College Debt – How To Avoid It, and How To Get Out Of It
College is a great time to learn, grow and pursue your passions. Unfortunately, it can also be a time when students accrue massive amounts of debt, which can take years to pay off. However, it's possible to avoid a lifetime of debt and still get a great education. In this article, we’ll look at ways to avoid college debt and how to get out of it if you’re already in debt.
1. Start Saving Early
If you’re still in high school, it's never too early to start planning for college. By starting early, you can save a lot of money over time. Parents and students can start putting aside money into a savings account, a 529 plan or another type of college savings account. Even small amounts saved over time can add up to a large sum of money. Develop a budget and stick to it to ensure you have enough savings for tuition, textbooks, food, and other expenses.
2. Apply for Scholarships and Grants
When it comes to paying for college, the best approach is to always be on the lookout for scholarships and grants. Many organizations offer scholarships and grants to students who meet certain criteria. Some scholarships are based on academics, while others are based on financial need, community service or other factors. Make sure to submit your scholarship applications on time, and provide all the necessary information. This is an excellent way to avoid college debt as you don't have to pay back scholarships or grants.
3. Consider Community College or Public Universities
Consider attending community college as your first option. Community colleges are affordable and offer a wide range of classes that can help you find your passions and interests. You can achieve your basic courses like English and Math for a much lower price than you would at other four-year institutions. It could also be a strategic move to attend a community college to save money before transferring to a four-year university. Public colleges and universities are also affordable and offer a quality education. They may have less celebrity than private universities, but they are worth it for a significant decrease in debt.
4. Be Careful With Student Loans
Student loans are an excellent tool to help pay for college, but they should be used wisely to avoid excessive debt. When it comes to student loans, only borrow what you need, and investigate all options. Before you take out a student loan, make sure you understand the repayment terms and the interest rate. A federal student loan is ideal because it has a lower interest rate and a fixed repayment plan. Try paying the interest while you're in school to save money on interest payments later. Remember, student loans have to be repaid, so be mindful of borrowing too much.
5. Work During Your College Years
Working a part-time job during college will help you save money and reduce the amount of debt you need to take on. Consider working on-campus where the work schedule is very flexible around your classes. Many jobs on-campus provide work-study programs, where you can work up to 20 hours a week and use the money to pay for expenses. There are also part-time jobs available off-campus that will allow you to save money. Keep your eyes open and apply for jobs as early as possible.
6. Check Your Eligibility for Tax Credits
Many college students are eligible for a tax credit, which can help reduce the amount of taxes you owe. Common tax credits for college students include the American Opportunity Tax Credit and the Lifetime Learning Credit. Talk to a tax professional or the financial aid office at your college to find out what tax credits you may be eligible for.
7. Keep Your Expenses Low
Living frugally while in college can help you save money and avoid excessive debt. Cut back on expenses like eating out, expensive clothes, and entertainment and opt-in for a more affordable lifestyle. Look for cheaper housing options and consider renting textbooks instead of buying them. Use the resources that your college provides, such as computer labs and the libraries instead of spending money on technology.
8. Make a Plan to Repay Debt
If you’re already in debt, don’t despair! There are ways to manage and eventually pay off your college debt. Create a plan to repay your debt, including listing all your debts and interest rates, and then deciding what to pay off first. Consider consolidating your loans to make them more manageable with lower interest and a more affordable monthly payment. You may be eligible for loan repayment plans like Income-Based Repayment and Pay As You Earn programs. Explore all repayment options available and choose what works best for you.
In Conclusion
College debt is a significant problem, but it’s not impossible to avoid. By following these steps, you can reduce the amount of debt you take on and graduate from college debt-free. Remember, scholarships, grants, working, and attending community colleges and public universities will save you money. If you're already in debt, create a plan to pay off your debt by consolidating loans and exploring the different repayment plans available. Building a solid financial foundation for yourself during college will set you up for a bright future with fewer financial worries.