Student loan debt—the very phrase can strike fear into the hearts of college graduates everywhere. In 2012, the average college student graduated with $29,400 in student debt, and that number continues to climb; in fact, the student loan default rate is now higher than the national graduation rate. Scary stuff, right?
So what can you do?
Making smart decisions now will help you farther down the road. We’ve compiled some advice from real graduates on how to keep your student debt under control and keep college affordable, no matter what your financial circumstances look like.
Take Only What You Need
It’s easy to think short term and see dollar signs when you receive your proposed financial award package for the first time, but remember that it’s your choice which forms of financial aid, loans included, you take out. Just because you’re offered several thousand dollars in loans each year, it doesn’t mean you necessarily need that much to get by.
Make a budget, be honest with yourself about your spending habits and what you really need, and take out only what you need to pay for school expenses and live comfortably. (Trust us, you’ll be glad you opted for ramen noodles and deli meats instead of fancy dinners and take-out when your loans come due).
Start Paying Early
You don’t have to wait until you’re out of college to start paying down your student loans. For unsubsidized and private loans, interest adds up even while you’re still in school—and that increases faster than you might think.
Consider paying down your loans, or at least covering the interest, while you’re still in school if you can afford to do so—your future self will thank you for it.
Not all financial aid is created equal. Typically, scholarships and grants do not need to be paid back after graduation; student loans, whether they’re public or private, subsidized or unsubsidized, always do. Diversifying the types of financial aid you receive can help keep your bottom line down while you work toward your degree.
If you have to take out loans, explore your options. Stafford subsidized loans typically have lower interest rates and do not accrue interest while you’re in school. Private and unsubsidized loans usually do. Try to find a mixture of funding sources that cover your expenses and keep your debt down.
Keep Your Costs Low
There are plenty of ways to keep your living expenses low while in college. This might include choosing a less expensive school (staying in state or choosing a public school tend to be considerably less expensive). If it is an option for you, living at home is another way to save money while working toward your degree. You might even avoid paying for rent or groceries.
Work for Your Spending Money
Depending on your circumstances, it may not be a bad idea to take on an extra source of income while you’re still in school, at least to cover your day-to-day expenses: groceries, gas, and spending money. This might be a part-time job, a Work-Study position on campus, or a summer job. You may even be able to cover some of your school-related expenses—like textbooks or fees—and therefore keep your student debt lower. Federal Work Study is a federally funded program in the U.S. that assists students with the cost of college by helping them earn funding through a part-time job to pay for school-related expenses.
If you’re balancing a full-time career with your academic goals, check out our guide on how to pull off the double life successfully.
Student debt can be manageable if you take steps ahead of time to keep your total costs down. If ever in doubt, talk to your school’s financial aid counselors—they can answer questions and help you find opportunities to fund your education.
Looking for more information on student loans?
Still confused about student loans? Check out our free 2-page Quick Guide on Student Loans that covers all the basics you need to know.