Wednesday, September 18, 2013

Game of Loans: Decreasing Your Student Debt Before You Graduate

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(This article is an adaptation of my guest post on, and is further elaborated upon in Barrister on a Budget:  Investing in Law School…without Breaking the Bank.)

Are you worried about graduating, about finding a job, about repaying your debt?  Welcome to 2013.  Finances are in the forefront of every student’s mind and should be.  Tuition expenses are steadily rising, government interest rates waver between each administration, and the job market continues on shaky ground.  Rest assured, you can decrease the burden of debt before you even graduate – yes, before!  If you can work hard, keep organized, and implement some (or all) of these tips, then you can definitely make your student loan debt much more manageable upon graduation.

1.      Avoid borrowing loans altogether.  Scour the internet, local and state organizations, your parents’ employers, and corporations, anything you can do to find scholarships.  Then apply for all of the ones you qualify for.  Joining the military is also an option that many don’t consider.  The military can offer partial and sometimes full tuition assistance among other benefits.  And, as some employers give preference to the military, can be the difference in acquiring a job or not in this market.
2.      Graduate early.  Take the full credit load every semester if the tuition is a flat rate (every school is different, so check the policies).  Also, use your summers wisely and do an internship that will give you course credit (and maybe some spending money) as well as experience and references!
3.      Pay attention to your loan agreements.  Apply for subsidized loans and other need-based loans that will usually cover part or all of the interest payments while you are in school. Shop around for the lowest interest rates. Keep your documents organized, and be aware of your repayment schedule to avoid late fees.  Know your options to make repayment manageable to avoid fees and default.
4.      Negotiate tuition fees.  Schools have some fees that are negotiable.  Fees that are automatically put into your tuition bill, such as gym membership and athletic tickets, can sometimes be opted out of and removed from the bill.  Check with your financial aid office and discuss these options.
5.      Get a job.  If you can handle working while in school (make sure you are able to maintain a high GPA to open up employment options upon graduation), then get a job…maybe two.  Colleges offer Resident Advisors (RA) and work study programs that are flexible with school hours and offers benefits – reduced housing expenses and free meals for RAs – or payment to pay for educational expenses.  If you get a job off of campus, you can also use your income to pay for educational expenses, decreasing the amount you may be inclined to borrow.
6.      PAY YOUR INTEREST!  Most student loans have compound interest, which means, if you don’t pay your interest, it adds on to the total amount owed and the next time you are charged interest, the payment is based on the new total.  This can quickly add up!  You will maintain the original balance owed and will pay less over the life of the loan if you make your interest payments during school.
7.      Budget.  Keep track of your spending for a month or a semester and create a budget.  Review your spending and determine what areas you can cut back in.  Do you really need the $7 Starbucks coffee or the newest iPhone?  Can you buy used books or eBooks for lower prices?  Have you been flashing your student ID as much as possible to get all the discounts on food, entertainment, and transportation possible?  There are free apps available that can easily keep track of your budgeting for you or there is always Excel Spreadsheet.

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