Ways to Minimize Student Loan Debt

Time To Read 3 MIN READ

Student loans are a normal part of the college experience these days, but it's still a good idea to keep your post- graduation debt as small as possible. Having a good game plan and making a serious budget helps you to avoid leaving college with bloated debt.


Plan on Getting a Degree in Four Years or Less

Time is money, and the more time you spend in college, the more money it will cost you. While it's possible to graduate in four years, many students don't. Make sure you don't spend more time in college than you have to by taking one or more of these steps:


  • Take a gap year after high school to give yourself time to determine what you want to study. 
  • Take summer classes, if necessary, to graduate in four years.
  • Once you start, stay in school until you graduate.


Budget Before You Borrow

To keep your student debt down, you'll need to carefully budget, and that starts by figuring out exactly how much you'll need under various scenarios. Compare the expenses of living at home to living on campus. Compare tuition and fees of a community college to those of a four-year school. You don't necessarily have to pick the cheapest option, but make sure you have a good reason for choosing an alternative.

Once you have a plan, estimate the costs of your life at college, making "frugal" your mantra. Don't get a car unless you really need one, and upscale rentals or dining out just won't make the budget.


Maximize Your Non-Loan Funding

Think scholarships, savings from high school jobs, work-study programs, gifts from your grandmother and employment while in school. The idea is to maximize the amount of college expenses with money that is not borrowed. Look into ROTC programs, see about fulfilling the residency requirement in the state you'll be attending school or find a part-time job. 

First, add up all the funds you can get from other resources, including your own, then subtract this amount from the total you'll need for the school year. The remainder is the amount you'll need to borrow in student loans. Don't take a dime more. Do you really want to increase your long-term loan burden to buy a flat-screen TV for your dorm?


Understand Your Student Loans

This is not the time to close your eyes and hope for the best. Most student loans are contracts with the government, so be sure you understand every part of the deal. Ask questions and read the documentation until you know:


  • Amount you owe, calculated anew each semester.
  • Interest rate — when it kicks in and whether it changes.
  • Your grace period after college.
  • How monthly repayment amounts are determined.
  • Payment schedule options.
  • How long to pay off each loan — calculated after each semester.