This post was inspired by a reader question:
Student loans these days are a part of most college students’ vocabulary. Yes, there are some recent college graduates who didn’t have to take out student loans when they chose a college, but that’s pretty rare these days.
http://www.cartoonstock.com/directory/s/student_debts.asp
Before you sign that paper
Here are some tips for those of you who haven’t gotten to college yet. You will be able to avoid the debt headache if you follow this one tip.
Work during college
You can work full time while you are in school.
Cons: Your grades may suffer a little.
You won’t get to participate in the ‘College Lifestyle’.
Pros: You will have the money to take that extravagant vacation.
You can start building an early retirement fund or save money to start a business.
You’ve Already Signed the Paper
Here are some ways to make that looming debt a little smaller if you have already taken out some loans.
Only Borrow What You Need
If you know your major and you decide to take out a loan, only borrow what you can expect to make in your first year. For example, the starting salary for a finance graduate is 47,500 according to PayScale.com. If you’re a Finance major, your total student loans for all four years of college should be less than or equal to this.
Don’t have a major?
DO NOT BORROW MONEY.
If you are not sure what you want to do when you graduate, chances are you will be in school a long time, changing majors and racking up a big bill. If you are not sure what you want to do, start working full-time. You’ll at least find out what you don’t want to do, and it will put you closer to deciding what you do want to do.
Cons: You may have to get a part-time job to fill in cash for extra activities
Pros: You will have a low payment once you graduate
Borrow for a Full-Time Load
If you decide to borrow as much as the government allows and maybe more, you should prepare as much as you can while in school by networking in your chosen field and applying for internships as early as sophomore year.
Cons: You will have a large debt payment once you graduate
Pros: You will get the advantage of the full ‘College Lifestyle’.
You can work an unpaid internship to get the experience you need to pay your debts off once you graduate.
You’ve Already Graduated
So what if you’ve already graduated and now you have a humongous debt payment? You have a few options. First use a student loan calculator to figure out what you owe.
Forbearance
If you are not making enough income to cover your loan payments, contact your lender and request a forbearance. As long as they are government loans, there are a number of options available for you.
Payment Plans
There are several loan payment plans available for those of us with Federal student loans. You can select a variety of repayment plans. One depends on your income, one is a fixed payment and there is even one that has a gradually growing payment. If you borrowed from a private lender, check with them to see what plans they have. Private lenders make their own rules with regards to repayment.
Deferment
Hide! You can become a full-time student, again, and your lender should automatically get the notification from your school that you are a full-time student. This will increase your overall debt load, but you may gain some skills that will propel you into that full time job you need.
The Good News
There is a silver lining! Remember that the government loans that you have are locked in to a relatively low interest rate. If you pay them at 4% and you can make 7% with a dividend paying stock, then you are earning 3%. So don’t let your student loan payments get you down. You used a form of debt that’s called good debt. It’s debt that leveraged you into a position to increase your earning power. Eventually you will pay it off. If you can’t afford the payments right now, talk to your lender and explain your situation. They will do what they can to help.
Did you pay off your student loans already? Were you one of the few that didn’t have to take out loans?
As someone who still has student loans some 15 years after college, I would recommend paying as much as you can as soon as you can.
That’s my only non-mortgage debt and now I’m really starting to make progress on the balance.
Wow, I think if college students really thought about the time it would take them to pay off their loans, they would think twice about taking so much out.
I went over this website and I conceive you have a lot of good information, saved to bookmarks (:.
Thanks!
After 2 years of college at a community college I decided to take time to start a business before going to a university to finish my degree. I don’t qualify for financial aid and didn’t want to take out a loan….and trying to support yourself while handling the workload of upper level college is too hard. In my eyes the best solution is to make money from my business to pay for college. That way I won’t have loan debt and I will have a business after I graduate.
That’s a very smart way to avoid taking out loans. But working at your business will probably require as much effort, if not more, than working a job.
It’s tough on students these days. I would say make sure your career choice can pay off those student loans. If you’re going for an art history degree, then it’s probably more wise to take a little extra time and work to pay off your education along the way.
That’s true. Even though I was a finance major I still wish I would have paid mine along the way.
Big follower from this page, a ton of your articles or blog posts have really helped me out. Awaiting news!