10 Realistic Ways To Manage Your Student Debt Load

By Ritika Puri | October 21, 2011 AAA

Could you imagine starting your adult life with six figures of debt? If a student decides to attend a private four-year university at $30,000 per year, he or she is facing an accumulated debt burden of more than $120,000 at graduation. That's if we ignore interest. If he or she wants to pay off the loan in under a decade, he or she will need to make payments higher than $1,000 per month. Even if the student is lucky enough to land a full-time job with a competitive salary of $50,000 per year, a monthly debt payment of $1,000 will delay him or her from owning a house, buying a car or saving for retirement. (To help you understand student loans, check out An Introduction To Student Loans And The FAFSA.)

According to "The College Board," public four-year colleges cost an average of $7,605 per year while private colleges cost an average of $27,293 per year. "The College Board" assessed these figures for the 2009-10 school year, which was two years ago when tuition was likely cheaper. It is also important to understand that costs vary considerably throughout the country and that additional fees for living expenses, health insurance and school supplies can make costs even higher.

While it's true that debt loads will vary from student to student, it's also true that any debt is bad debt when you're 22 and scrounging your way through a low-paying internship. Here are 10 realistic techniques that young people can leverage to keep student debt under control.

Live Like a Minimalist
While you can't change the decisions that you made in the past, you can control how you manage your money moving forward. In other words, you can actively trim your expenses by keeping the luxury to a minimum. Instead of buying the brand new 3-series, buy the previously-loved Civic. If you can, live in a place where you don't need to rely on gas. Live with roommates, and make sure that all of your purchases give you high ROI. Make responsible choices that help you prioritize your repayments.

Find Additional Work
If that internship or entry-level job isn't paying enough, find additional work opportunities. Instead of begrudgingly taking a waitressing job, use your after-hours career to leverage your creative talents. You might enjoy making crafts, taking photographs, writing or composing music. Take an entrepreneurial approach to your second-job, investing your time in your hobbies and future. Who knows? Your second job might even grow into a standalone business.

Take Strides Towards a Higher Income
Step No. 1 was to secure that first job. Now, you should focus on moving ahead. It won't happen overnight, but experience will help you increase your market value. Keep growing your experience by keeping current with skills and by learning everything that you possibly can. Always keep your eye out for higher-paying work.

Keep Other Debt at Zero
Instead of relying on your credit card, pay in cash. If you do use your credit card, pay it off in full every month. As tempting as a pay-later purchase program looks, avoid it. When you're dealing with heavy student debt, your credit card balances should be as close to zero as possible. Moving forward, spend less than what you own.

Set Tangible and Realistic Repayment Goals
Sit yourself down to outline how much you can afford to repay and keep payment levels above the bare minimum. After outlining your monthly payments, contextualize them within your loan's bigger picture. In how many years will your loan balance be zero? In the long run, do you save on interest by making larger payments now? By answering these questions, you'll be able to better assess how much you should be paying.

Keep Maintaining Savings
No matter your debt load, it is imperative that you continue to invest in your future. Always maintain an emergency fund in addition to a plan for retirement. In your current life situation, keep a balance between yesterday, today and tomorrow.

Look into Graduated Repayment Options
At the beginning of your career, your income potential will be relatively low. Gradually, over time, your market value will increase, and you will be able to take home more money. Talk to your bank or loan provider if it is possible to adjust your payments based on what you're earning. You can even follow this approach without formally adjusting your payment plans. Just pay as much as you can now, and expect to pay more when you start to earn more. Be careful when you follow this approach, you don't want to end up procrastinating when something is so important.

Consolidate and Refinance
Especially if you have multiple loans, refinancing may help you save money in interest fees. When you refinance, you are replacing your original debt obligation with new terms. You may be eligible for a better interest rate, and you may be able to extend your repayment period. You may also be able to change your loan from a variable to fixed rate. Your loan provider will help you explore your options.

Negotiate Fees and Interest Rates
Nobody benefits from defaulted student loans. For that reason, you should work with your bank to find a payment structure that works well for you. If you're unemployed, you may be eligible for loan forbearance until you get back on your feet.

Explore Forgiveness Programs
Some federal loans permit forgiveness programs. Teachers, non-profit professionals and public interest lawyers qualify for these types of benefits. If you are interested in these career paths, you should take some time to investigate your options.

The Bottom Line
Student loans are overwhelming. For some, they are unbearable. Before resorting to financial and emotional chaos, we should take a step back to make the most out of what we have. Even with seemingly few options, we can move forward towards a better future.

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