The average student loan debt for a college education has skyrocketed. The average debt hit $29,927 in 2020 and is likely to continue to rise. And, students who attend private institutions or pursue graduate degrees pay considerably more. Currently, there are 42.5 million Americans carrying roughly $1.57 trillion in student loan debt. Sometimes it feels like there is no end in sight. Fortunately, there are ways to spend less on student loans and reduce the amount of debt when you graduate. These are five ways people can limit how much they borrow and help them get out of debt faster.
5 Ways to Spend Less on Student Loans
1. Apply for scholarships and financial aid.
Every student attending college in the United States will have to file their FAFSA. Based on your reported income and debt, you may qualify for federal grants and financial aid that can help lighten the financial burden. If you have maintained a high GPA or have been a stand-out performer in your extra-curricular activities, you may also qualify for scholarships.
However, there are still scholarship opportunities even for the average student. Private donors offer a variety of scholarships depending on your background, intended major, and life experiences. Thanks to Fastweb.com, I received a $10,000 scholarship towards my tuition. While it didn’t cover all the costs, it made them more manageable.
2. Get a part-time job.
Another way to limit your debt is to get a part-time job. The more you can earn towards your college expenses, the less take you’ll have to take on. Your university may have work-study opportunities on campus. Or, you can find other jobs to support yourself through college.
I was determined not to take out student loans which meant I always had at least two part-time jobs. As a self-proclaimed queen of side hustles, I have done just about every job imaginable. I worked as an administrative assistant in several departments on campus and worked a variety of part-time jobs including retail, telemarketing, serving, bartending, tutoring, cleaning houses, pet-sitting, and even dealing poker. Although exhausting, the extra income gave me a foot up in life.
3. Comparison shop for interest rates.
Another tip that can save you money is to shop around. This is also true for student loans. There are many banks that extend private student loans. But, some of them have better terms than others.
Currently, College Ave Student Loans, Credible, and Sallie Mae offer the best terms and rates on student loans. However, you should do your own research and not rely on the financial aid officers at the college. They will often steer you towards the easiest, not the best option for you.
4. Find a job that offers loan forgiveness.
Another way to spend less on student loans is to find a job that offers forgiveness. Many hospitals offer degrees in the medical field as long as you sign a contract to work for them once you graduate. Another option is a position in public service. These jobs won’t pay you big bucks, but many of them do offer student loan forgiveness after a number of years of employment.
Those who make 120 monthly student loan payments while employed by a federal, state, or local organization or a tax-exempt nonprofit are eligible for the complete forgiveness of their remaining debt. So, a teacher working in an underserved area may be able to have the balance of their student loans forgiven after ten years of employment and on-time payments. There are many civil service jobs that could provide debt relief. Review your options carefully before making your decision.
5. Check out repayment assistance programs through the state and local government.
Finally, look for repayment assistance programs through your state and local government. You may be able to reduce the amount of student debt owed by taking advantage of their programs.
For example, Kansas is currently offering $15,000 in student loan repayment assistance for folks who move to specified Rural Opportunity Zones. And, Niagara Falls, New York, is offering $7,000 in student loan repayment assistance to people who live in specific downtown areas. If you are considering moving, check out the benefits offered to see if moving to the area will help you reduce your student loans.
Many careers require a college degree. So, you shouldn’t make decisions about your education lightly. But, choosing a college and figuring out how to pay for it are important financial decisions that can affect you for the rest of your life. If you make the wrong one, you will be straddled with debt for years to come.
However, smart planning can help you spend less on student loans. Once you gather all of the information, you can make an informed decision about the best course of action for you. And when in doubt, always seek professional advice from your financial advisor. Getting expert advice can help keep you out of debt and offer a stronger financial future.
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Jenny Smedra is an avid world traveler, ESL teacher, former archaeologist, and freelance writer. Choosing a life abroad had strengthened her commitment to finding ways to bring people together across language and cultural barriers. While most of her time is dedicated to either working with children, she also enjoys good friends, good food, and new adventures.