The cost of higher education is outpacing the rate of inflation. As a result, today's college students are in a unique position where student debt has become the norm - how else will young adults pay annual fees in the tens of thousands of dollars?
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Of course, the cost of higher education varies from school to school - for instance, state schools are cheaper than private schools, but the issue of choosing a college is more complex than cost. As a student, you want to get the best value for the money you spend on your education. Ultimately, the returns on this investment are measurable through income, happiness and your quality of life. Student debt is tied to all of these returns.
Student debt is a problem for many college graduates, and it's a problem for which few experts have a comprehensive and effective solution. The "best" strategy is different for everyone and involves a combination of factors. Mix and match from these 11 tips to get started.
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1. Research loans and shop for the most competitive interest rates possible.
Students have a variety of options when it comes to student loans, ranging from subsidized federal loans to private bank loans. Some federal loans will not accrue interest while students are in school, while others will. Some loans have fixed interest rates while others have variable interest rates. Know the terms of your different options and understand what types of repayment plans are realistic for you.
2. Get a cosigner.
If you need to take out a loan, try to get a cosigner. Cosigners will help you obtain a better interest rate, which means that you will pay less for your loan.
3. Start paying loans when you're in school.
Pay what you can, even if you have a subsidized federal loan. If you're accruing interest, pay that interest as soon as you can. There's no need to procrastinate about payments - if you do, your payments may balloon. Debt is tough to manage on an entry-level salary, so it's better to start paying yours down as soon as possible.
4. Don't rely on debt.
Avoid the temptation of paying for your education entirely with debt. Work during the summer and school year so that you can make partial tuition payments. Over four years, the sum of these payments will be substantial. Getting job experience while you are at school will also help you develop your career skills so that you can work toward a higher salary when you graduate. Work experience will also help you secure a full-time job at graduation, especially if you've taken the time to develop skills that are practical and in high-demand.
5. Become self-employed.
Another great way to generate some extra income is to do some freelance work. Tutoring is a great place to start because you can set your own hours, choose your own clients, and work with the skills that you've already developed in school.
6. Keep your living expenses to a minimum.
The lower your cost of living, the more money you can put toward tuition, thus avoiding debt. Cook your own meals, live with roommates and buy second-hand as much as possible. Use every opportunity to trim expenses so that tuition can be your top financial priority.
7. Go to school where a car isn't necessary.
Cars are money-sinks when it comes to the cost of ownership, maintenance and gas. Save the car expenses for when you're working; in the mean time, attend a school with a strong public transit system.
8. Sell your textbooks.
Think like a business person and explore different markets for textbook sales. You might realize that your school's textbook buyback service isn't the best option. Markets to explore include Half.com and Amazon. Use your textbook sales money to buy new textbooks for the upcoming semester.
9. Use open source or computer lab software.
Make use of everything that is free and available to you, including open-source software and student discounts on software offered through your university. In most cases, you don't need the fanciest and most expensive software packages to excel at the basics. (For related reading, see 6 Free Alternatives To Your Favorite Software.)
10. Find out about fellowships and scholarships.
Talk to career counselors, funding offices and others in your program to find out about what's out there. Sometimes, word of mouth is your most effective strategy. Be aggressive in your scholarship search, and don't expect scholarships to find you.
The Bottom Line
Student debt is tough to manage, but it's important to start somewhere. Even if a debt-free education is less than realistic, it's important to make a conscious effort to trim expenses. Manageable debt is second-best to no debt at all.