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Count yourself among the privileged few if you finish college without accumulating a lot of debt. Unfortunately, the majority of college graduates have student loans to pay off. Depending on the amount of debt you’ve built up, you could end up forking over a portion of your paycheck for years, or even decades, after you leave school. So, you need to come up with a plan to pay off your student debt as quickly as possible. Following are a few tips on how to manage student loan debt.
Keep Debt to a Minimum
Since it’s probably not financially feasible for you to pay for your college education up front, the easiest way to manage student loan debt is to borrow as little money as possible. Before you begin taking college courses, it would be a good idea to apply for as many scholarships and grants as you can find. Many charitable organizations offer scholarships, as do a number of businesses. The federal government, state governments, and other institutions offer grant money to qualifying individuals. Even if you don’t receive enough to cover all your expenses, every penny that’s given to you is one less you’ll need to borrow. Another way to minimize student loan debt is to work part time while going to classes and during school breaks. It won’t be easy, but the money you earn will help pay expenses, and reduce the amount of your student loans. The less complicated your repayment structure is, the easier it’ll be to manage your student loan debt.
No matter whether your accumulated debt is a lot or a little, the best way to manage it is to start early. Don’t wait until you graduate to think about how you’re going to repay the loans. Instead, you should set up a payment plan before you finish school. As part of the process, student loan borrowers are usually required to go through exit counseling so they can understand how the credit system works. If you don’t pay back your student loans, your credit rating could suffer dramatically. It may be a good idea to secure a credit card while you’re still in school and learn to use it responsibility. In this way, you can build a credit history that will help you when it comes time to begin paying off your student loans, and in any future economic transactions. If lenders see that you’re a responsible borrower, they may be more willing to offer low interest loans, which will help keep your student loan debt at a minimum.
Keep Track of Your Debt
Before you begin college, you should sit down with your family and a credit counselor and determine the maximum amount of money you will need to have in order to complete your college education. By doing this, you can come up with an approximation of the debt you’ll have upon graduation, and allow you to begin working on a repayment plan. It may seem like a lot of work, but the further ahead you look the easier it’ll be to manage your debt. Keep track of your loans while you’re in school and make sure the amount you’re borrowing doesn’t exceed your anticipated debt. If you find that you’re borrowing more money than you thought you’d have to, try and find ways to reduce your expenses. Work more hours on a part time job, or share textbooks with a friend. Use a bike to get around campus as an alternative to owning a car. Instead of taking a trip to Florida during spring break, get a part time job or take a cheap vacation closer to home. If you keep track of your debt as it accumulates, it could encourage you to cut expenses or find a way to bring in a little money to keep the amount of your loan at a more manageable level
Unless you’re an economics major you will undoubtedly benefit from professional advice on managing student loan debt. From the beginning of the process until the loans are paid off, it would be a good idea to stay in contact with an economic advisor, such as an accountant or an attorney. It would also be a good idea to shop around for the best rates on any loans you take out. Check with your financial advisor to see if consolidating those loans will save you money.
Guest post from Taylor Harris. Taylor writes about online colleges and universities for BestOnlineColleges.com.
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