It’s common sense that if you have the means to avoid taking out student loans, then you should pay for school some other way. However, for a lot of students – especially in this day and age – taking out student loans is quite necessary. It’s become so common that it’s actually rare to encounter a student or graduate without debt.
When you’re beginning to finance your education, it’s important to do it wisely. Following these tips will have your future-self thanking you.
Start looking for assistance as soon as possible.
Loans are a great way to make sure that you are able to experience college, but paying them back is not so fun. Many students overlook the fact that there are so many potential grants and scholarships that they can earn, or they’re simply too lazy to apply for them all. Use a scholarship matching website to find scholarships that you could potentially qualify for, and apply for a few per day. Also, if you’re employed, find out if your work has education compensation.
Borrow federal loans, and only borrow privately if necessary.
By now you’ve probably heard about the FAFSA form, or the Free Application for Federal Aid. This is the information that the government uses to determine how much money to lend you while also potentially offering you grants and workstudy opportunities. It’s important to fill this out because federal loans are superior to private loans for a number of reasons: they have a fixed interest rate, for example, whereas private lenders often increase their interest rates over time. Federal loans can also be deferred while you go to school or if you are in tough financial times. All in all, it’s much easier to budget for federal loans over time.
Don’t get duped by private lenders.
Many private lenders advertise an extremely low interest rate to get you to apply. Then, they increase the rate the next month. They will never be more economical or predictable than federal loans, so only resort to these companies after you’ve maxed out your federal loan capacity. Even then, do lots of research and shopping around.
There are a lot of states that will pay for your education if you do your first two years at a community college and finish up at a state school. You could literally save yourself tens of thousands of dollars by going this route. You could also take supplemental college courses online or during summer break at a lower cost offered by your community college, which will help you catch up without being so expensive.
Try not to fall behind in your degree.
It’s best not to declare a major until you feel certain about it, because sometimes, switching majors puts you back so far that you need to take another year of schooling. This means another year of loans, which your federal loan capacity may not allow for. Plan your courseloads wisely and with a schedule for graduation in mind.
Remember that excess loan money isn’t just “free money.” Pick up a job if you can, and send your excess money back to the lender so you have less debt in the long run. If you can’t get a job or don’t want to, try to live somewhere with lower rent, cut costs on textbooks, et cetera to make your money stretch further.