Funding College: How to Avoid the Student Loan Debt Crisis
According to the Institute for College Access and Success, the average debt of college students graduating in 2011 was about $26, 600. This reflects an increase from the previous year of about five percent, and the rising trend is anticipated to continue. And this is only the average. Over 10 percent of students have borrowed at least $40,000, and some have borrowed $80,000 or more. It is estimated that approximately 37 million Americans are trapped in the student loan debt crisis.
According to U.S. Department of Education, approximately 8.8% of borrowers default on their student loans (this number is 4.6% for private institutions, and up to 15% for for-profit schools). Clearly, the burden of the student loan debt crisis is significant, but there are a few steps that you can take to avoid falling into the debt trap.
- Think About Taking Less Expensive Pre-Requisites
In 2011, the cost of attending a typical private college on a full-time basis was about $42,224 per year, according to a CNN Money report. On the other hand, the average in-state tuition for a public college for that same year was about $21,447. Choosing a local public college or online school could help many students avoid accumulating a heavy student loan debt.
While tuition costs should not keep you from attending your dream school, students should consider completing their pre-requisites at a community college or online—both are less costly options compared to public and private universities. Much like community colleges, 4-year universities still require students to complete a certain number of pre-requisite credits. Luckily, many community college pre-requisite credits can be successfully transferred when applying to a 4-year university. Many students can cut thousands of dollars in tuitions costs by completing core curriculum classes at a local community college, or online school.
- Make Use of Alternative Credit Options
While you may want to follow the degree program for your four-year school so that you earn a prestigious diploma from that institution, the fact is that most schools allow you to transfer credit into the school from other sources. Consider using your summers to earn more affordable credit from a community college. In many areas, tuition at a community college may be half the cost of public school tuition. You may also use College Level Examination Programs (CLEP) to earn credit. If you are still in high school, maximize your credits earned before graduation with International Baccalaureate (IB) and Advanced Placement (AP) exam credit.
Review your college’s transfer rules carefully. If your school is like many others, you may be able to transfer 60 credit hours or more from another school or via credit by exam options.
- Get a Part-Time Job
The fact is that while you are in college, you will need to pay for your tuition, books and other education expenses, and you will also need to pay for your basic living expenses. Your parents may be helping you out with some of them, but for the remainder of the expenses, you will either need to pay for them from your own income or with borrowed money.
Oftentimes, students will receive more loan money than they need for tuition. It is imperative, however, that students understand that this money isn’t free. One of the best ways you can cut back on student loans is by declining extra loan money, and instead covering your living expenses with a part-time job. To enjoy the best results from your job, look for an entry-level position that requires little to no experience in the field that you want to pursue after graduation. This way, you can earn money now to pay for your expenses while gaining real-life experience in your field.
- Live at Home
Living at home while in college may not be ideal, but it also may greatly reduce your living expenses. On-campus as well as off-campus housing can be expensive, and you will also have to pay for food, utilities and more. If your home is relatively close to campus, you can eliminate a considerable amount of your living expenses by bunking up with your parents for a few more years.
- Look for Scholarships and Grants
You may think that scholarships are only available for elite athletes and those with keen intellect. While there are scholarships available for these individuals, there are also scholarships and grants available for people who are focusing on a certain major, who have specific ethnic backgrounds, who have volunteered significantly over the years and more.
There are numerous online directories and printed books that you can use to find scholarships and grants. CollegeBoard.org has a scholarship search engine for students, while Scholarships.com has information on a number of Federal scholarship programs. Always apply for scholarships from reputable websites, and avoid applying to any scholarships that require payment or application fees. While it can take some time to locate these and to apply for them, the funds they can provide you will decrease the amount of money that you need to borrow with student loans.
- Take Your Time
Hopefully, you have sat down and analyzed your total education expenses and living expenses for the year in comparison with the income that you will receive from a part-time job and the money that your parents are able to provide to you on a regular basis. The gap between the income and expenses in your budget represents how much money you will need to borrow for student loans. However, consider preparing a revised budget based on attending fewer classes per semester. By spreading your time in college out over an extra year or two, you can more easily absorb the cost of your college education into your budget.
The fact is that many students pay for college with money borrowed from student loans. Some students will pay for all of their college education and most or all of their living expenses with borrowed funds; these individuals inevitably graduate college owning tens of thousands of dollars to their lenders. When you apply some of these strategies throughout your college years to reduce living expenses, to reduce education expenses and to boost your income, you will be able to minimize the amount of money borrowed from your student loans.
Chad Fisher is an education enthusiast with a passion for building education and career-oriented websites to help people learn more about careers that interest them. He is currently interested in helping people find a career in ICD medical coding and billing as the health industry continues to integrate ever more advanced technology. Learn more at MedicalBillingandCodingU.org.
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