Student Loans

How to Avoid Student Debt: A 5-Step Guide

how to avoid student debt

As college tuition costs continue to increase exponentially, the amount of student loan debt that students take on is also on the rise. According to the Project on Student Debt, in 2005, a college student graduated with an average of about $18,000 in debt. A recent 2016 analysis from LendingTree showed those with student debt in the top 100 U.S. cities, had an average debt of $27,162 per individual.

Taking out student loans has become a need for many who wish to further their education. For some, student debt may seem like an impossible burden. But, the best way to keep student loans from plunging you into unmanageable debt is to put strategies in place to minimize your debt. Here are some ways to reduce your need to borrow.

Five Ways to Avoid Student Debt

1. Save money beforehand:

If the cost of college seems insurmountable, take a proactive approach and start saving money before you apply. You can save money from a summer job or after-school work, and no matter what the amount, it will reduce the amount you’ll need in loans.

2. Look into grants and scholarships:

Millions of dollars in scholarships are available to offset college tuition and fees, both from the federal government and private and nonprofit organizations. Do an online search or check with your current school’s counselor about scholarships and grants you may be eligible for.

3. Consider a part-time job:

Working through college can provide money for living expenses and even tuition, which will reduce your need for loans. Look into opportunities to work on campus or off campus, and make sure your work hours will fit with your academic schedule and leave time to study. Many colleges also offer work-study programs through the financial aid office.

4. Enroll in community college:

The first two years of college classes tend to be general education requirements that also are offered at community colleges. Tuition at community college usually is cheaper than tuition for four-year colleges, and you may also save money by living at home longer. The average tuition and fees for a four-year, private college were about $31,000 per year in 2014-15, according to the College Board, while the costs of a public two-year college were about $9,000 annually.

Most community college credits will transfer to a four-year college, which could leave you with only two years of the more expensive college instead of four.

5. Make good borrowing decisions:

Always apply for federal loans first, as they have more lenient repayment policies and lower interest rates than private loans.

If you do find yourself graduating with a crippling amount of debt, there still are ways to reduce your monthly payments, and in some cases, eliminate them altogether. The federal government will forgive federal student loans if the borrower works for at least ten years in a public service job in fields such as law enforcement, education, or nonprofit work. The government also has loan forgiveness programs specifically for teachers and those in military service. If you don’t qualify for federal student loan debt forgiveness, check with your state. Most states offer at least one type of loan forgiveness.

Student loan refinancing, consolidation, and monthly payment plans also can make paying back student loans more palatable. While staying out of debt in the first place always is the best option, plenty of financial options are available for reducing monthly student loan debt payments for those who find themselves over their heads in debt.