Handling Student Debt: 5 Tips for Future Students

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Graduating high school is, undoubtedly, a big deal. With that diploma in hand, you are suddenly faced with more choices than you ever have been before. Where are you going to college? What do you want to study? Where are you going to live? How are you going to pay for it all?

This last question is a big one – and it’s getting bigger every year. Increasing tuition and housing rates, coupled with the fairly poor job market, are making it more and more difficult to get through college without acquiring a significant amount of student debt. In fact, the average member of the class of 2011 graduated with about $22,900 in student loan debt alone. That, of course, doesn’t factor in credit cards or car loans.

So what’s a starving student to do? Well, if you’ve just graduated (or are graduating soon), the good news is that you’ve got a little time to figure things out. Read on to discover some tips that can help you avoid overwhelming debt later in life.

Tip 1: Avoid it when you can.

The best way to handle debt is to not go into debt in the first place. Avoid student loans and credit cards whenever possible. The problem here is that it is incredibly easy to go into debt – especially for students. Credit card and loan offers will be coming at you left and right. Just remember that although these may present you with an “easy” solution now, they’ll come back to bite you in the end. Develop the mentality that student debt is not your friend! It should only be used as a last resort.

Tip 2: Work, work, work. Save, save, save.

Saving money is going to be a lot harder when you’re away from home, paying for things like rent and groceries on your own. Spend your last few months or years at home working hard and saving what money you can. If you have a job, determine a set amount or percentage of each paycheck to set aside for savings. Think about other options too, such as savings plans offered through your bank, and come up with something that works for you. Your savings will add up faster than you might think!

Tip 3: Find other ways to pay.

Do research –as much as you can handle – on scholarships. There are lots of them out there, and some you don’t even have to demonstrate financial aid to qualify for. Get in touch with a high school counselor, or someone in the financial aid office at your future college, to help you find applicable scholarships. Also, talk to these people about grants, which could be available depending on what field you are planning on going into.

Tip 4: Ride in (cost-conscious) style.

Shake the idea that your ride has to be the best around. If you need a car, don’t think that you have to buy something new, especially if you’re going to have to take out a loan to do so. A sensible used car (in good shape, of course) will be much cheaper and will still get the job done. If you don’t need a car, don’t get one! Most college towns have plenty of options that make a car unnecessary. Think about using public transportation, riding a bike around town, or getting a motorized scooter. You’ll save now and later – since you won’t have to buy gas!

Tip 5: Keep an eye on things.

Whether you are able to stay completely out of debt or not, make sure that you keep a close watch on your finances. Know your account and loan balances, and make sure you don’t let things get out of hand. Credit cards can be especially dangerous here, since it’s so easy to play around with money that you can’t see. If you do need to have a credit card, consider using it only for certain things, like gas or groceries, and don’t let yourself use it for anything else! This will help you keep your credit card spending in check.

For many students, it is simply impossible to get through four (or more) years of school without taking on some kind of debt. If you find yourself in this situation, don’t despair! Just make sure you are keeping everything in check by working hard, saving when you can, and not taking on any unnecessary debt. Work hard to make sure your investment remains an investment in your future rather than a future financial burden.

Katie Harris is a freelance writer for Alliance Credit Counseling. A not for profit debt management organization, Alliance offers financial training courses as well as credit and bankruptcy counseling.

Related articles

• 5 Steps to Killing Your College Debt (distance-education.org)
• Top Five Financial Mistakes New College Graduates Make (distance-education.org)
• Graduating into the Real World: Slash the Loans and Plan for the Future, “Half of students in 2009 wished they knew more about the importance of saving and living within a budget” by Brian Link (centralscholarshipbureau.wordpress.com)

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