Keeping your student debt in check

It is almost impossible to go to a college, and college, and get a degree, any degree, without encurring some form of debt. Here are a few tips to keeping that debt as small as possible.

When it comes to college, every dollar counts.  Photo by The Cleveland Kid

When it comes to college, every dollar counts. Photo by The Cleveland Kid

Get professional advice – If you are serious about keeping your personal deficit in check, one of the best things you can do is consult a professional to help you organize a game plan. A financial planner or some sort will be your best bet (but any accountant, lawyer, or financial worker with the correct background) to help you make sense of a) how much you need b) how much is available to borrow c) what your other options are.

If the goal is to keep the student loans as small as possible, have this expert crunch the numbers. Find out how much you can save by working part time, and how long it will take to repay the loans you are taking. Having a clear-cut plan for the long term will let you know exactly where you are and what you need to do to keep spending, costs, and borrowing to a minimum. Which leads to the next bullet point…

Borrow as little as possible/cut down on spending – Once you have selected your school and program, it will be easy to find out exactly how much money you need for tuition, books, and miscellaneous fees. Add to this the money needed for food, transportation, housing, etcetera. Find out how much you need, so you can figure out how much you need to borrow. Once you get that number, start looking for any way to cut down on expenses. This may mean cable, Starbucks lattes, or a car payment. Look for ways to cut down on your personal overhead, to see if it will reduce the amount of money you need to borrow.

Plan for the future – The biggest problem faced by many students is graduating and spending time looking for a job and a career while the loan payments begin to pile up. When constructing your financial plan, also plan for your post-graduation future. Look for a program with a high rate of post graduation hiring, or a field that is high in demand. But do whatever possible to hit the ground running, so that when you secure your degree you can transition quickly into a paying job. By doing this, and immediately working on paying off those loans, you will save yourself hundreds if not thousands of dollars in interest payments.

Go for Federal loans first – There are several reasons to pursue Federal education loans before securing privately-backed loans from banks or other lenders. First, they are relatively easy to get, if you are legitimately in need and going to school. Second, they have the lowest interest rates you can find. Currently, the interest is at 3.4 percent. Third, federal loans have options for deferment (if you continue your education, the loan payments stop while you are enrolled in school), or forbearance (if you cannot make payments, its possible to enter a new arrangement with temporarily reduced payments over a greater period of time)

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