According to research, the total student loan debt in the United States stands at a whopping $1.7 trillion and is expected to grow further. Having debt affects an individual’s quality of life while they are in college and negatively affects their ability to buy a house, car or save for retirement in the future.
While dealing with debt is understandably tough, The Purpose of Money explores various steps students can take to minimize and manage long-term debt.
Start Saving Before College
The earlier you start saving, the less you’ll need to borrow. When you start the process of shortlisting colleges, simultaneously begin looking for ways to earn extra cash. This can include working in the neighborhood, getting an internship, or a part-time job. Even earning a couple of hundred dollars will make a considerable difference in covering the cost of books, food, gas, and more once you’re in college.
Research Affordable Schools
While Ivy League colleges are on everyone’s list, instead of only focusing on the most expensive institutions, look for those well-known for your field of interest and provide the option of pursuing the program online.
Online schools offer students a lot of flexibility. Students can work while being a student without classes interfering with their work schedules. And there are dozens of different degrees available. For example, if you’re interested in earning a degree in business, spend some time researching schools to see your options. Then, choose the most affordable school that fits your needs.
Choose High Paying Careers
Given that you are investing a large sum of money towards education, you should also seek a good return on investment. One effective way to increase chances of high returns is to pursue careers known for higher paying salaries, such as information systems manager, pilot, psychiatrist, or cyber security professional. A higher income translates to quicker repayment of debt and a clear path toward financial independence.
Graduate on Time
As reported by CNBC, only 41% of college students complete a bachelor’s degree in four years. Each additional year of college equates to thousands of dollars of more debt and a delay in the transition into your professional career.
An increase in graduation time is often caused by students transferring to different colleges midway or changing majors. To avoid such situations, do thorough research regarding your prospective university, degree, future job prospects, and more before making any commitments.
Earn While You Study
Strive to work part-time while pursuing your degree. You can work on or off campus. These positions help you earn and garner experience for your resume, improving your future prospects. In addition, you can pursue off-campus jobs, including working in retail, for NGOs, or in the hospitality business.
Additionally, working during college will help you cover expenses and repay your student loan interest. Student loan lenders often provide grace periods for repayment, which include the time the individual is in college. However, your interest continues to accumulate. As a result, once you complete college, you already have a more significant amount to repay, on which more interest will keep accumulating. By starting to repay early, you will reduce your principal amount and have to pay lower interest charges.
Minimizing your student loans and paying them off quickly is a worthwhile goal. Any debt you carry will affect your credit score, which could delay other plans, such as purchasing a house. A high credit score will help you when taking on a mortgage, facilitating more favorable terms on your loan.
The keys to minimizing long-term debt are planning early, borrowing only what’s needed, looking for affordable schools (online and offline), and making repayment a priority until you are debt-free. With these tips, you can get the education you want without the financial burden.
Are you looking to grow your wealth? Need help getting your financial situation in good working order? The Purpose of Money can help. Get in touch for a free consultation.