Now that college education costs more than the average house in most states, it is essential for parents and students to be smart about how they intend to pay for college.
According to Mark Kantrowitz, publisher of FinAid.org and Fastweb.com, the nation’s student loan debt ($830 billion) has exceeded the nation’s credit card debt ($826.5 billion)!
As loans are relatively easy to apply for, many students are borrowing the maximum amount of money offered, often taking out even more when they cannot find a job. Therefore, it is important to be smart about taking out loans. Below are some effective tips on how to minimize your school loan debt:
- Borrow Stafford loans first – they’re cheaper, more available and have better repayment terms than direct loans.
- Live like a student while you are in school so you don’t have to live like a student after you graduate.
- Plan to graduate on time! Make sure to take course that fulfill your graduation requirements. Keep class withdrawals and repeats to a minimum as they are just wasted credit hours and tuition costs and delays progress toward graduation.
- A good rule to follow is not borrow more for your entire education than your expected starting salary after you graduate. Otherwise you will find it difficult to repay the debt and you will be at higher risk of default.
- If you are borrowing more than $10,000 per year for college, look into switching to a less expensive school.
- Try to pay the interest during school on the unsubsidized loans so the interest isn’t capitalized.
- Shop for books and supplies carefully; check online for discounted and used books.
- Watch personal expenses closely; create a budget and set spending limits for yourself.
- Start saving for college before you start college.