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How to Minimize College Debt

Submitted by strandslucia on Thu, 09/02/2010 - 11:06
Debt Managmeent //

These days a college degree won’t necessarily get you a job, but it almost always gets you in debt. In fact, a recent story on the Wall Street Journal reported that student loan debt now exceeds credit card debt in the United States. According to the report, student loans outstanding today-both federal and private-total about $829.785 billion.

According to the same article, the average bachelor’s degree graduate in 2008 owed $23,186 and college tuition is continually increasing. While $23,000 may not sound like a lot of money, take into account the interest tacked on to that, and you might reconsider.

With the number of college graduates landing a job dropping (1 in 4 according to National Association of Colleges and Employers) and tuition costs rising, its important to think about ways to minimize your college debt before your graduate. If you’re thinking about taking out student loans to get your degree, consider the following options for minimizing your college debt:

1. Apply for scholarships
There is no shortage of scholarships available to students these days. Scholarships of all types are available, you just need to take the time to do the research and do it early. In fact, one of the best places to look for scholarships during a down economy is your own local community. Talk to local businesses and organizations and find out what opportunities are available. No matter what the size of the donation, every little bit counts.

2. Consider community college
A great way to save money on your college education is to attend a community college for the first two years and transfer to a four-year university once your general education requirements are complete. Not only will you save money on tuition costs, but living at home during this time will allow you to save money on living expenses. It also provides an opportunity for new college students to explore what area of study they want to pursue before committing to a major, which prevents wasting time and money on classes you don’t need.

3. Borrow only what you need
If you are going to borrow money for college, borrow only what you need and be responsible about how you spend that money. Just because the lender offers X amount, doesn’t mean you should take X amount. You must remember that the amount you have to repay is much more than the amount you borrowed due to interest. Also take into consideration how long it will take you to find a job post-graduation and other financial obligations you will have when its time to start paying back loans.

4. Get a job
If you’re an undergraduate, you should work a part-time job during college. Having a job will help you earn extra money so you can avoid credit card debt and start saving. You can use your earnings to help pay for college expenses or help pay off debt. Working a job will also help you gain work experience before graduation. With the job market as tough as it is today, you want to make sure you begin your search early and find a position with skills that apply to your major. A great way to find new opportunities is to attend networking events in your area. You never know who you’ll meet and the more connections you make, the better.

Do you (or did you) have college debt? What advice would you give to others looking to take out a loan to get a college degree?

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