University can be an exciting phase of life. However, knowing you have to pay off student debt as soon as you finish school may not be so fun. According to a recent study, 1 in 6 Canadian bankruptcies are due to student dent. That means a large number of students are struggling with these loans and are unable to find a way out of them.
A 2019 survey stated that 14% of respondents said that the solution to this student debt crisis is that students work harder. While 22% claim the only solution is free post-secondary education. These suggestions can be helpful to some extent but can’t guarantee a debt-free university experience.
The solution is to focus on the practical ways that could help in paying off university debt. Read on to learn about some practical money-saving suggestions.
Before Starting University
Get a Job and Start Saving Money
The most useful and hands-on way to get out of student debt is by working. There is no harm in taking on a part-time after school. Find a job that you think you can easily manage along with your studies and consider working part-time on weekends. Here are plenty of jobs that students can easily do such as babysitting, sales or even freelancing.
The key point is to utilize your time and do what you can right now to help reduce your student debt. If you find it difficult to save money, consider opening a savings account that you contribute to each money.
Next, calculate and divide your income into savings and expenses. Put some cash towards your monthly expenses and deposit the remaining in your savings account. This will help a lot in saving your hard-earned money. Lots of banks are offering students savings accounts.
Study Hard in High School
A pro tip to stay away from student loans is to get good grades during high school. High marks can make you eligible for scholarships (see below), which can help pay for your post-secondary education.
Apart from a strong academic record, you can show off your skills with extracurricular activities if you have an interest in any of them such as sports, art or music. But remember; don’t get too involved in these activities to a point where they start affecting your studies.
Balance both your academics and extracurricular activities. Aim for the best grades you can to help you avoid taking on additional student loans in the future.
Apply for Scholarships
To study on a scholarship is an honor for any student. There are various fully funded and partially funded scholarships you apply for. Check your school’s website and online scholarship banks. Then apply for the ones you think you will be awarded.
Moreover, you can look into the options available with the help of the financial aid officer of your school. You don’t need to always get a high funded scholarship. Sometimes you might have a chance to get the lower value ones with less competition for them.
You might feel that such low funded scholarship is not even worth it, but they can still help.
Search for Government Grants
There are two options when we talk about student debt. One is government student loans and the other is private student loans. Government student loans or federal loans are the best options as they have lower interest rates than the private student loans. The payment plans for government loans are more manageable and there is a chance of loan forgiveness too.
Besides that, you can pay the debt off when you start working if you have plans of working in the public sector. You can also opt for a work-study program offered by the college and work to reduce your college dues.
Avoid Private Student Loans
Before getting into the debate about private student loans, let us have a quick overview of how student loans work. You can borrow money which you have to return with debt, of course. There are payment plans and different interest rates for every type of loan.
The other note is that private loans don’t have programs like loan forgiveness or general grants as you may get with government loans. You know you must have to pay it back with strict payment plans and higher interest rates. So, it is better to avoid private student loans where possible.
While You’re in University
Work Part-Time During the School Year and Full-Time During the Summer to Earn Money for College
In order to finance your expenses; try to find a part-time job or a paid internship. Work for few hours a week you can manage easily along with your studies. Do not overburden yourself as it will affect your grades. Use this money to pay off student debt. Most universities offer a semester break or some time off during the school year. Use this free time to earn extra funds.
Live at Home with Your Parents
Research shows that many millennial students prefer to live with their parents to reduce the expenses. Staying with parents is a much cheaper option for most of the students rather than staying on-campus or off-campus as it will help them to pay off student debt more easily.
There are some drawbacks of staying with parents such as travel expenses or missing out on some college activities such as group study. But still, it may be a cost-beneficial choice to stay with your parents during university.
Make a Budget
Budgeting is probably the most effective method to keep a track of your income and expenses. Getting started with budgeting may sound complicated, but it doesn’t have to be. You can start by recording your monthly expenses such as house food, rent, bills, transportation and entertainment charges. In this way, you will know how much do you earned and spend last month.
Don’t just make a budget and then forget about it, instead stick to it. There are many budgeting tools available online that can help you to make a budget with minimum charges. This habit of making a budget and keeping a record of your expenses will not only help you in college. This will help you for the rest of your life.
Find Ways to Reduce Your Costs
Try to reduce your expenses by cutting down on unnecessary purchases. Don’t use your car if your college is nearby or a better idea is to sell it to pay off student dent. Similarly, live with roommates to reduce your monthly rent and utility bills.
Buying nice things is a norm in college, but you should try to avoid it where possible. Learn how to cook some basic dishes instead of eating out. Cut down on your entertainment expenses such as cell phone or video streaming subscriptions. Consider buying a used furniture, electronics, and clothing compared to buying new. Not only will it be lighter on your wallet, but also easier on the environment (less waste).
Avoid Credit Cards
The more debt you have, the more stress there will be. Student loans are already a lot of handle. Combining this with other debt like a credit card may sometimes cause more stress in your life. So, try to avoid credit cards as much as you can.
Credit cards usually have high-interest rates that are not at all suitable for students already in debt. If it is necessary to use a credit card, use a secured credit card. Moreover, keep a track of your credit and try to pay off the debt as soon as possible to be on the safe side. By paying off your bills on time, you can avoid accruing expensive interest on your statements.
After You Finish University
Pick Your Repayment Plan
There are various repayment plans available to pay off government loans. You can opt for the one suitable for you to reduce your monthly stress. Each plan is different and has different terms and conditions. You can look into which is better for your student debt.
When you start earning money after school, you can budget how much money you’ll be earning each month, along with your monthly expenses. This will guide you in how much of your student loans you can pay off each month. Everyone’s repayment plan has its pros and cons. Doing some budgeting up front can help you with planning to pay off your debt in the long run.
Find a Side Job to Boost Your Income
Getting a job right after graduating might seem overwhelming. In case you get a full-time job, it may still be tough to manage all of your expenses and paying off your debt from a single salary. A solution to this is to find a side job (or part-time job) and increase your income. Use this extra income to pay your student loan debt.
Start saving for your future
Paying off your student loan is important. But at the same time, you can build good lifelong habits by saving for your financial future. This includes putting aside some money each month for a rainy-day fund, investments like stocks or bonds, and life insurance. These are all things that you can continue to invest in, even after your student loans are finally paid off.
Getting an education can be expensive. For most people, obtaining a university degree includes having to pay off student loans. This can be difficult once you finish college. However, by planning ahead, you can create a plan that will make student loan repayments easier. Budgeting, working while in school, and cutting down on your expenses are some of the techniques you can use to achieve your student debt repayment goals.