With the rapidly rising cost of tuition, many college students are relying on student loans to finance their education only to find themselves overwhelmed by debt after graduation. By planning ahead and borrowing wisely, students can minimize the amount they’ll owe and pay off the debt faster.
- Only borrow what you need. It can be tempting to apply for student loan funding above and beyond the basic tuition needs to supplement living and entertainment expenses, but the more money borrowed, the longer it will take to pay off the debt. Working part-time can be a good alternative for bringing in extra cash flow.
- Pay attention to the loan repayment terms. Signing on a dotted line for student loan money is easy enough, but at some point that money has to be repaid. Make sure the repayment terms are clear and calculate what monthly loan payments will be to make sure they are affordable before getting the loan.
- Start saving early. Don’t wait until the first year of college to begin planning how to pay for it. Start putting savings away as early as possible, even if it’s just a little bit – every dollar will help. Savings accounts designed specifically for education expenses can be a great way to put money away with possible tax benefits.
- Earn college credits in high school. Many high schools offer Advanced Placement (AP) courses, allowing students to begin earning college credits. Not only will this save on tuition, but AP courses also can potentially help students earn more scholarship money.
- Take advantage of other funding options. Student loans aren’t the only route available to help students pay for college. There are many scholarships and grants available. Fastweb.com provides a free scholarship matching service to help students pay for college. Parents may wish to look into whether borrowing money from a retirement plan or IRA makes financial sense for the family.
- Cut back on housing expenses. Instead of using student loan money to rent an off-campus apartment, consider applying to become a resident assistant (RA) in an on-campus dorm. RAs supervise dorms and in return often receive steeply discounted or even free housing in the dorm. Living at home with parents for a year or two during college is another good option for saving money on living expenses.