Looking for ways to avoid student loan debt? We have some useful tips and strategies that can help.
Did you know that the average student loan debt for American graduates was $30,000 in 2017?
You also probably don’t know (or want to know) that Americans owe $1.4 trillion in student loans. Talk about scary! To paint a more global picture, the average student debt is $30,800 in the UK, $22,000 in Sweden, $20,000 in Canada, and $22,000 in Australia.
Student loans can cause a great amount of stress and can be very overwhelming. Considering the high prices of tuition, it’s the only option for many students who want to earn a degree but can’t afford to pay for it.
If you’re already in debt or hoping to steer clear of it as much as possible, this article will help you find ways to avoid student loan debt. If you follow these tips, you can successfully manage your school finances and not become just another scary statistic.
Facts about Student Debts
To give you an idea of just how serious student debt has become, here are some US and global student loan debt statistics.
- 44.2 million students in the US have student loans
- Average monthly payment is $351
- The degrees with the highest student debts are Medicine and Health Sciences at $161,772 and Law at $140,616
- 37.5% of students with loans are under 30 and 62.5% are over 30
- Total student loan debt in the UK is $100 billion
- Total government student loans in Sweden in 2012 was $3.5 billion
- Australian graduates don’t have to pay off student debt until they start earning $40,000 per year. Similarly, Canadians don’t need to start paying until they earn $25,000 per year.
- Germany offers free tuition, and so the average student loan debt is only $2,400
Before you start studying
The thing about student loans is that they seem like a good idea at the time you sign up. They allow you to choose the school you want, be able to live comfortably, and have the freedom to study full time.
But the debt creeps up on you and you find yourself in a deep problem. So let’s try to avoid that!
Here are some ways to manage student debt before you start studying for your degree.
Start working and start saving
The best and most effective way to avoid debt is by earning an income and paying for school by yourself. We understand that is not always possible. Tuition prices can be very high and most students can’t make enough to pay full tuition. But remember, paying for some, even half, will make a huge difference. The sooner you start to earn money and are able to finance your schooling, the less dependent you are on banks. And no one wants to be a slave to the banks!
Excel as best you can in high school to be eligible for scholarships
Another really smart way to avoid debt is by being smart at school! If you can focus on your studies in high school and excel in your courses, you can be eligible for scholarships and grants. These can sometimes fund your entire tuition! And if not all of it, they can be a major help.
Apply for scholarships/grants
Every college or university has their own scholarships and grants for students to apply for. If you already have a school that you are planning to attend or are interested in, always search their website to see what scholarships and grants they offer. You should apply to all of them if relevant. Remember, there’s no harm in trying.
Not all scholarships have to be from the school you attend, though. There are external programs offered to students. International Student offers an online search for international students to find scholarships.
Choose a less expensive or free college
University of the People offers online tuition-free degree programs. Not having to pay for tuition is a surefire way to avoid student debt since most of the money borrowed is for high tuition costs.
Countries in Europe, like Germany and France, offer free university tuition. Top Universities has a list of free or low-cost universities that could be potential options to study abroad. Many American students choose to study abroad in an attempt to save money. 36% of university students studying in the UK are American, with 20% in Canada, 10% in France, and 9% in Germany. It goes to show how expensive American universities are and how far students are willing to go — literally — to save money.
Fill out your country’s student aid application
Whether you live in the US, Europe, or elsewhere, every country has its own government student aid program that is aimed to help you with tuition costs, cost of living, books, and more. It’s a good idea to check with the country that you either live in or are planning to study in. Here are a few examples of what is offered to students:
- In America: FAFSA has a free application
- In the UK: you can apply for student finance services
- In Canada: there is student financial assistance
- In Japan: JPSS has programs for international students to apply for financial aid
Applying for Student Loans
If you’re looking to apply for a student loan, it’s best to go about it wisely. Forbes has a list of wise steps to take when applying for a student loan, including:
- Not taking a loan amount that’s more than your expected first year’s salary
- Federal loans are better than private ones. They have fixed interest rates that don’t rise each year, deferment periods so you can pay the money back after you start working, and you don’t need a cosigner.
While you’re studying
You may already have started studying and are well on your way to earning your degree by the time you read this article. You might be worried about how you’re going to pay for the rest of your schooling and think that a student loan is the only way.
But there are ways to finance your studies without getting knee-deep in debt. You can make wiser choices from now on and look to different sources for help. These are ways in which you can manage your student finances once you’ve already begun studying.
Work part-time while studying
If you’re studying part-time, then working part-time will be the best and most cost-effective way to fund your schooling. But we know that many students study full-time with hopes to finish sooner and start working. So if you study full-time, you can consider working full-time in the summers or on occasional evenings. There are also remote jobs that you can do from home or on a freelance basis that can help earn extra income and not be too overwhelming or demanding.
Budget your spendings and find ways to be cost-effective
There are many ways to budget your living and student costs.
- Buy used textbooks or find free ones. Check out this article on how to find free or really cheap college textbooks.
- If you’re going to live on-campus or close to the university, live with roommates and cut on rental costs.
- Buy your own food and cook at home as much as possible. Eating out for every meal, or even once a day, really adds up.
- Avoid too many credit cards. There are tons of credit card companies out there with low student fees. But it’s just like the loans — they seem appealing at first, but the debt adds up. You don’t need to be adding anymore debt!
Pay in installments rather than loans
If you choose to pay the college directly without a loan, it’s best to know about their payment plans. Most colleges offer installment plans that are interest-free and might have only a small fee. Choosing to pay in installments rather than by loan can help avoid debt. That is, if you have the money but just not all at once.
You can turn to your family, friends, and others around you to help fund your education.
Crowdfunding is relatively new in the world of student loan debt, but it’s becoming more and more popular as students are becoming more creative in their attempts to study and not fall into debt.
Employer tuition reimbursement
There are companies that are willing to pay either all or part of an employee’s tuition. It’s a win-win situation because for the employer, it builds loyalty and longevity in the company and for the student it’s an obvious plus to not have to pay for tuition!
It can depend, however, on a few things, such as the cost, your grades, and which programs. If you don’t yet have a job, consider the companies that offer tuition reimbursement. Estudentloan has a list of 10 companies that help students pay for college, including Starbucks, UPS, Wells Fargo, Verizon, and more.
If you already have student loan debt
Of course, there’s a big chance that you might already have some debt on your plate. If you already have a student loan, at least you know that you’re not alone. But don’t worry, there’s still hope! There are many ways to ease the pain of paying off loans.
Consolidate your loans
Consolidation is a financial strategy for loans and credit card debts with high interest rates. It reduces interest rates and monthly payments to make things more manageable.
Student loan refinancing
Refinancing means you exchange your current federal and private student loans for one new single loan with a lower interest rate.
Make an extra payment
An extra payment!? Sounds crazy, but it can help in the long run because it can help save how much you have to pay in the end. Take this example: With only an extra $100 per month payment on your student loans, you would save $3,048 and pay off your student loans 2.83 years earlier. If you can make it happen, it’s definitely worth it!
We understand how costly university can be and we’ve seen how massive the student loan industry has become. That’s why it’s so important to know your options and avoid student loan debt as much as possible. Hopefully, with some of these tips you can complete your studies without the heavy burden of being a slave to the banks. If you can manage a financial plan that makes sense to you and is affordable, you can then focus on your studies with a clearer mind and be more likely to succeed. Good luck!