Americans owe over a trillion dollars in student debt. In fact, the country carries more student loan debt than credit card debt. And that debt can be crippling. On average, students graduate nearly $30,000 in debt. The average loan payment hovers just under $400, and graduates are struggling to pay those minimums. More than 11% are in default. Fortunately, there are steps you can take to avoid crippling student loan debt.
Make a Plan Before You Enroll
If you want to avoid unnecessary student debt, you must figure out how you’re going to pay for school before you enroll. If you have a few years before you expect to start school, start saving now. A 529 account can help you do that. Contrary to popular belief, you don’t have to be a young child to benefit from a college savings account. Any amount that you can put back now will help immensely.
Additionally, you should think about strategies for lowering the amount you’ll have to pay out-of-pocket. Scholarships, grants, work-study programs and employer-sponsored programs can all help, but they have to be in place before you enroll in school.
Spend Strategically While You’re in School
If you’re like most people, you will have to take out student loans — 73% of people do. Taking on student debt is serious and can have long-lasting implications. For this reason, you should always borrow strategically. Never borrow more than you need, and don’t live off your student loans. Rather, use loans only to pay for tuition and education expenses. If you need money to live on, consider a part-time job or side gig.
Strategies for Shaving Chunks off Your Loan Balance
You can pay off your student loans faster and drastically reduce the amount of interest you pay if you look for ways to pay down your debt quicker. Try to make payments on your loans before they’re due, even if you’re still in school. Making payments during the interest-deferred period is a great way to get ahead.
Also, look for programs and jobs that will pay off or forgive your loans. The Public Service Loan Forgiveness program will pay a portion of the loans held by AmeriCorps service members. Some federal jobs, such as those in the public education system, will pay off loans for those who agree to work for them for a specified amount of time. Many other companies in the public and private sectors offer tuition reimbursement.
Getting an education doesn’t have to result in crippling student loan debt. There are things you can do to avoid digging yourself in too deep. And, with strategic planning, you can pay off the debt you do have much quicker than you realize.