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Graduating From College With Minimal Debt

Trying to pay for college without incurring a large amount debt is a high priority for most families today. Many families talk about which college to attend, what to major in and the high cost of college, but some families don’t consider the added cost that may be involved when their child transfers or changes their major. The increased cost for many will result in more debt. All of these decisions have financial consequences that are not very transparent.

Due to the lack of transparency, high emotions and the easy ability to defer payment, families are unable to project the financial consequences of these important decisions. Here are some tips to help both students and parents engage in a better college and avoid the burden of excessive student loan debt.

Understanding Your College Credits

A college student is considered a full-time student at 12 credits. The problem is, in most cases, a student will not be able to graduate within four years if they only take 12 credits per semester. If you consider that 35% of students will transfer and up to 80% will change majors, understanding the number of credits needed to graduate is critical. This seems like a simple concept, but in many cases most students do not do it properly. The best way to save money is to graduate on time.

Timing Courses Properly

Many colleges design their curriculum to fit the majority of students as they progress to graduation. As a result, some courses are only offered during certain semesters. In addition to tracking the total credits, students need to map out the required courses for their major and know when each course is offered. This course-mapping should be done at the end of each semester and during registration.

Making the Most of College Tuition

Students and parents need to understand the tuition bill. For many colleges, you pay as a full-time student. The number of credits a student can enroll could vary from 12 to 18 credits per semester. As more students transfer and change majors, using every hour paid for as full-time tuition to take more courses could be a great way to save money and graduate on time. (For related reading, see: 2 Ways to Finish Undergraduate and MBA Programs Faster.)

Annual Federal Loan Limits

Proper debt structure is often overlooked in planning for college. This is due to the complexity of the subject and lack of proper information. Students should apply for the Federal Direct Stafford Loan each year while an undergraduate. This will improve the student’s loan repayment and forgiveness options after graduation. The annual limit will be adjusted based on the student’s academic progress and if they are full-time or part-time.

Incurred and Projected Debt

More colleges are sending letters each year to students stating the amount of current federal debt they have incurred, and some states are even requiring it. This is an improvement, but is only part of the solution.

Students and parents need to know both the incurred and projected debt for graduation. To make the best college financial decisions, families need to know what they will pay and how they will pay it. The “how” is custom to each family and determines the debt structure. When families are able to envision both the “what” and “how” of their specific situation, they will make better financial decisions and avoid excessive student debt

Understanding Loan Repayment Options

A student’s debt structure drives their loan repayment options. Federal student loans have better loan repayment and loan forgiveness options. There are currently 10 federal loan options, and only certain loan repayment options qualify for loan forgiveness.

There are more advertisements regarding private student loan consolidation. However, if the borrower converts their federal loans to a private consolidation, they no longer have access to the federal repayment options for those loans. (For related reading, see: Student Loan Refinancing: The Pros and Cons.)

Ensuring Career Income Covers College Debt

Following your dream is an important part of the college experience and college major decision, there needs to be some reality involved as well. As part of that decision, the student needs to investigate the demand of that career and its income potential. Many students are under the impression that having a college degree guarantees them a secure financial future. That is not true.

While making these college student loan decisions, many students are not considering if their career income can support the debt being incurred. This is one of the major weaknesses of paying for college. (For related reading, see: College Tuition vs. Investing: Is It Worth It?)

Tax Strategies to Reduce Cost

A variety of tax strategies or advantages are often overlooked when paying for college. For example, the American Opportunity Tax Credit is worth up to $2,500 per year per student. This is limited to undergraduate students and can only be used for four years. There are also tax harvesting and business owner advantages that are more advanced.

Using Summer Courses to Minimize Debt

A great way to save money is to take summer courses. Students can get ahead or use summer courses to get back on track if they are behind in credits due to a transfer or change in major. Summer courses can also help to minimize debt. The student should always check with the college and get any summer courses approved by the college if they will be taken at another college or community college. Each college is different and may have specific guidelines for course approval.

Planning for Post-Graduate Degrees

More careers are requiring additional education. Planning for this additional cost and debt needs to be done as soon as possible in the college decision process. Without this planning, students and parents may end up wishing they had made different decisions. Using all of the assets for an undergraduate degree may not be the best decision. Graduate loans have much higher interest rates and fees. 


Examining cost, debt and potential income are important parts of the college decision-making process. Managing expectations and lifestyle also need to be added to the plan. For example, certain jobs may require a car or the graduate may need to live in a specific area of the country, which could increase a graduate’s cost of living.

As a parent, I know how hard and emotional these decisions can be. I hope that these insights can help you navigate this complex process. At the end of the day, having your child graduate on time with manageable debt is a great accomplishment. To see them being happy, productive adults with a positive financial future is success!

(For related reading, see: Pay for College Without Selling a Kidney.)