How to Minimize Student Loan Debt

No wonder the cost of a college education and student loan debt are topics in the national Presidential campaigns. According to the College Board, the average tuition at four-year, public universities was $9,410, with private, non-profit four-year universities averaging $32,405 for 2015-2016. At the same time, MarketWatch reported 2016 White House figures that 70 percent of college students graduate with debt, adding to the already staggering $1.2 trillion student loan debt crisis.

In January 2016, Time Magazine reported that more than 25 percent of graduating seniors are leaving college with too much debt to handle. Affordable debt, Time's Mark Kantrowitz says, is when less than half of the increased salary degenerated by the degree can pay off the student loan in 10 years or less. Overburdening student debt can lead graduates to take jobs out of their field or deflect their careers and family plans considerably.

Steps to Minimize Student Loan Debt

Kantrowitz' rule of thumb is to not borrow more than your first-year salary, necessitating additional sources of income for repaying the student loan. The consequences of defaulting on student loans can be more severe than students think. The Federal government can garnish wages and tax refunds, and black marks on the graduate's first attempt to establish good credit can create negative ripples onward, creating barriers to affordable housing, transportation and revolving credit.

1. Save for College

One of the best ways to minimize student loan debt is to put money into a college savings plan.

Students can open bank accounts while they're in middle school, putting $20 a month away from chore money. Parents can enroll in 529 college savings or pre-paid tuition plans that let them set aside money for investing in their children's future while enjoying tax benefits.

2. Attend an Affordable College

Students should map out total costs for tuition, books and materials, commuting, housing, parking, and other fees and create a budget. If the college is not affordable, consider enrollment in a community college for two years to dramatically slash the tuition toward a transfer degree. If the college is out of state, consider enrolling in community college for one year to gain residency status for in-state tuition.

3. Target Your College Costs to Potential Earnings

If the career-entry salary must pay back student loan debt, compare tuition to estimated earnings. The U.S. Bureau of Labor Statistics maintains a database of careers by title, earnings, job projections and required education. Students can also complete their education ahead of schedule, taking less time and spending/borrowing less money. Summer classes are another way to shorten the time to graduation.

4. Investigate Types of Student Loans

Students should look into the range of student loans and financial aid available to them. For example, federally subsidized student loans come with a six-month grace period following graduation to help grads get their feet on the ground. Federal Pell Grants for undergraduate students do not need to be repaid.

Students and parents can research student loan articles or get competitive loan offers at LendingTree's Student Loan Center.

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