HOW TO AVOID STUDENT LOAN DEBT
Whether you are already in college or you plan to enter college soon, you have likely heard about student loans. In fact, you may have already come to the realization that you need to take out federal student loans to help you afford college. It is no surprise that college is expensive and student loan debt is a serious thing.
If you want to avoid student loan debt or minimize it as much as possible, there are some steps you can take to do so. Below, we will go over some of the different options you have to avoid or minimize student loan debt.
Scholarships for College
When it comes to your college tuition, you want to look for all forms of free money before you accept federal student loans. Scholarships are considered to be free money and this is money that you do not have to pay back once you graduate from college.
There is no limit on the number of scholarships that you can apply for, but it is important to make sure that you do apply for scholarships that you are qualified for. There are thousands of scholarships that are awarded to students on both a need basis and a merit basis. There is a difference between these two and you must make sure you meet the credentials to apply, otherwise, your application will simply be looked over.
You can search for scholarship opportunities in a number of places. The best place to start would be at your chosen university or community college and then move to an online search.
Student Loan Forgiveness Programs
Student loan forgiveness programs are in place to benefit those students who decide to enter into an approved career path. A student loan forgiveness program works to forgive your student loans or a portion of them after you have met the required credentials.
For example, you may be approved for student loan forgiveness under the Public Service Loan Forgiveness program when you work for a minimum number of years in an approved position within the public service field.
Some student loan forgiveness programs forgive all of your student loan debt and others will forgive a portion of the debt.
Apply for the Federal Work Study Program
The Federal Work Study Program or FWS is a financial nee based program that allows college students to work part-time while earning funds to pay for their college education.
The jobs in FWS are often located right on campus and can range from an administrative job to a job within the bookstore. Each job pays at least the federal minimum wage and can be direct deposited to your personal account or directly applied to your tuition or school fees.
FWS must be applied for through the FAFSA and it is a financial need based program, so you must demonstrate a financial need. Students who are approved will be awarded an amount that is earned by working part-time at their FWS job.
It is important to note that if you are approved for FWS, you are not simply given a job and you must apply for one, go through the interview process, and perform well on the job, as you would with any traditional job.
Federal and University Grants
Federal and university grants are another free money option similar to scholarships. You do not have to pay these funds back to the school and you are awarded the money either per semester or on a yearly basis.
One of the most popular federal grants is the Pell Grant. This is a grant that is need based and awarded to students who can demonstrate this financial need. The amount you receive will depend on your financial situation and is determined when you fill out the FAFSA.
The Pell Grant is just one federal grant available and there are many others out there and others that are offered by individual universities too. Each grant will have different requirements and some of them require you to have a financial need while others do not.
Student Loan Refinancing
Student loan refinancing is an option for students who qualify. Often times, you will need to have a cosigner, but if you have good credit history and a stable job, you may qualify to do it on your own. Student loan refinancing would require you to have a student loan or multiple student loans to apply, but you can minimize your debt with this option.
Refinancing allows you to obtain a new, lower interest rate on the loans that you already have. This means that you will save thousands of dollars in interest payments over the life of your loan. In addition, a lower interest rate also means lower monthly payments and you can usually rework the terms of your loan and either shorten or extend the length of the loan.
Proactive Payments on Your Student Loans
Lastly, you should be proactive with your payments on your student loans, as this will help you avoid more debt and pay down your current debt. When it comes to being proactive, you have a couple of options. First, you can make larger monthly payments when it is time to pay your monthly statement. The more money you send to your student loan provider, the quicker you will pay down your student loan debt and the less interest you will pay over time.
Another option is to pay the interest on your loans while you are in school. You do have the option to do this or you could simply defer the interest, but deferring it will cost you more money in the long run. Often times, your interest payments while in school are only $50 to $100, so it is not unmanageable and it will greatly help you in the end.
If you are trying to avoid student loan debt or greatly minimize it, the above options will help you accomplish just that. It is important to make sure that you never default on your student loans and if you run into trouble making any payments, you talk to your loan servicer right away.