Student Debt: How To Avoid It & How To Get Out Of It In 6 Easy Steps

Do you worry about student debt? You are not alone!

Going to college is a transformative journey for both students and parents. While post-secondary education is highly valued, figuring out how to fund it and avoid overwhelming debt can feel intimidating as the average student graduates with $28k in debt. 

The good news? 

There are countless resources available to help you tackle student debt. With the addition of the tips we’ll explore here, you can reduce your financial burden and feel confident about managing repayment without unnecessary stress once you graduate. 

Having a plan, knowing your resources, and exploring your options can help you avoid unnecessary fees, costly loans, and shared financial mistakes. Taking proactive steps—as you prepare for graduation or as you transition into the workforce—will enable you to handle student loans effectively. 

Now, you can continue on your path to college affordability, leaving room for focus to achieve your goals. You’ve got this!

Borrow Wisely

One of the most critical steps in avoiding overwhelming debt is borrowing wisely. Before taking out loans, ask yourself: How much is too much to borrow? While student loans can be a valuable investment in your future, borrowing beyond what you genuinely need could lead to unnecessary financial strain. Start by exploring every possible source of funding and financial aid:

• Scholarships and Grants: These are free money you don’t have to pay back. Look for scholarships from local organizations and national programs, and don’t overlook smaller awards—they add up!
• Work-Study Programs: Many colleges offer work-study jobs, which can help you earn money to cover living expenses without needing additional loans.
• Savings and Family Contributions: Use savings or contributions from family members to reduce the amount you need to borrow.

When taking out loans, prioritize federal loans over private ones. Federal loans often come with lower interest rates, more flexible repayment plans, and opportunities for forgiveness. Limit borrowing to the minimum amount you need for tuition and essential living costs, keeping future repayment in mind.

Plan Ahead

The key to effectively managing student debt starts before you even borrow. Building a financial plan can help you avoid surprises and control your expenses throughout college. Exploring resources specifically for your field of study can also open the doors to even more resources like current loan updates and loan repayment simulators. Here’s how you can start a your plan:

1. Create a Budget

Before starting college, outline your expected costs, including tuition, housing, meals, transportation, and books. Factor in any personal expenses, like social activities or supplies, so you can see the complete picture of what you’ll need.

2.Know Your Loan Terms

If you plan to borrow, take the time to understand the details of your loans. What’s the interest rate? When does repayment begin? Are there grace periods? Knowing and understanding these terms will help you make informed decisions and avoid confusion later.

3.Explore Payment Options

Some federal loans allow you to make interest-only payments while still in school. Even small payments during college can reduce how much you owe overall.

4.Have an Emergency Fund

Life happens. Having a small savings cushion can help you cover unexpected expenses without resorting to additional loans or credit cards.

5.Plan for Employment

Look into part-time jobs, internships, or work-study opportunities that can supplement your income. Not only will this help with expenses, but gaining experience during college can make you more competitive in the job market after graduation.

Taking these steps now can save you from financial stress later. A solid plan ensures you’ll stay on track, borrow only what’s necessary, and prepare for a smooth repayment process.

Common Mistakes Students Make

Even with the best intentions, it’s easy for students to fall into financial pitfalls that make managing debt more challenging. By avoiding these common mistakes, you can stay on track and set yourself up for success:

1. Borrowing More Than You Need

• Many students borrow the total amount they’re eligible for without considering whether they need that much. Remember, every dollar borrowed has to be paid back—with interest. Use your budget to borrow only what’s necessary for tuition, fees, and essential living costs.

2. Ignoring Interest Accumulation

• If you have unsubsidized federal loans or private loans, interest starts accruing while you’re in school. Letting it build up can significantly increase the amount you owe after graduation. Making small payments on interest while in school can save you money in the long run.

3. Skipping Financial Aid Opportunities

• Many students don’t fully explore scholarships, grants, or work-study programs, leaving free money on the table. Apply early and often for as many opportunities as you qualify, even if they seem small—every bit helps.

4. Not Understanding Loan Terms

• Taking out loans without understanding repayment terms, grace periods, or penalties for missed payments can lead to confusion and stress later. Read the fine print, and don’t hesitate to ask your financial aid office for clarification.

5. Delaying a Repayment Plan

• Waiting until after graduation to figure out how you’ll repay your loans can leave you scrambling. Start exploring repayment options, like income-driven repayment plans or loan consolidation, before your grace period ends.

6. Relying on Credit Cards for Expenses

• While credit cards can be helpful in emergencies, relying on them for everyday expenses can lead to high-interest debt on top of your student loans. Stick to your budget and prioritize spending within your means.

By staying informed and proactive, you can avoid these common mistakes and take control of your financial future.

Is There A Way To Get Out Of Student Debt?

Life happens. Emergencies arise, and you’re facing unexpected fees and an outstanding balance before you know it. Sometimes, things don’t go as planned, and when that happens, it’s easy to wonder if it’s too late to make progress or where to begin.

The good news is it’s never too late to take control of your financial future. By taking proactive steps now, you can get back on track and make strides toward eliminating your student debt.

Here are some actionable strategies to help you reduce your balance and regain your financial footing:

1. Start with a Budget

One of the first things you should do is create a realistic budget. This will help you understand how much money you have coming in and where it’s going. You can determine how much you can allocate toward your monthly student loan payments by tracking your income and expenses. Being mindful of your spending can also help you find extra room in your budget to make additional payments to accelerate your journey to debt-free living.

2. Prioritize High-Interest Loans

Not all debt is created equal. Federal and private loans typically have different interest rates, so it’s essential to first focus on paying off the loans with the highest interest rates. By tackling these loans, you’ll minimize the amount you’re paying in interest over time, allowing you to pay down your principal balance more quickly.

3. Consider Refinancing or Consolidation

If you have multiple loans, consolidating them into one simplifies your repayment process and lowers your interest rate. Refinancing might also help reduce interest rates for certain loans, but be cautious—this can affect loan forgiveness opportunities for federal loans. Make sure you weigh the pros and cons before making a decision.

4. Make Payments While in School or During the Grace Period

If possible, make payments while you’re still in school or during the grace period. Even small payments on the interest during this time can prevent it from capitalizing and becoming part of your loan balance. This will save you money in the long run and keep your loan balance from growing unnecessarily.

5. Look for Loan Forgiveness Programs

If you’re working in a public service job or another qualifying field, research loan forgiveness programs that may be available to you. These programs can help you reduce or eliminate part of your student debt after a set number of years of qualifying payments. Be sure to meet all the requirements and keep up with the application process.

6. Set Up Automatic Payments

Setting up automatic payments ensures you never miss a payment and can help you avoid late fees. Many loan servicers even offer a small interest rate discount for enrolling in automatic payments. Plus, consistent payments will help build your credit over time, making it easier to secure financial opportunities in the future.

7. Take Advantage of Income-Driven Repayment Plans

If you’re struggling to make ends meet, income-driven repayment plans can adjust your monthly payments based on your income. This can provide immediate relief and help you avoid defaulting on your loans. Be mindful, though—your payments may be lower in the short term, but interest will continue to accrue. Always keep an eye on the long-term impact of your repayment plan.

8. Stay Persistent and Seek Support

Tackling student debt can be a long road, but staying persistent is vital. Surround yourself with a support network, whether it’s a financial advisor, family, or peers who understand your goals. If needed, seeking professional advice can give you clarity and options you might not have considered. Remember, getting out of debt is a journey; every step forward counts.

Take Charge Of Your Financial Future

Student debt can feel like an impossible challenge, but it’s important to remember that there are steps you can take to regain control. Whether just starting your education or navigating post-graduation payments, each choice can bring you closer to financial freedom. Take time to budget, borrow wisely, and explore loan forgiveness and repayment options that work for your situation. By creating a plan now, you can take charge of your financial future rather than letting it control you.

While the road may not always be easy, persistence and patience will pay off in the long run. The key is staying focused, prioritizing your loans, and working toward a debt-free future. You don’t have to face this alone—resources are available, and support is out there. With dedication and a solid plan, you can reduce your debt and begin your post-graduation life with financial security. Keep moving forward, knowing that you can achieve that dream career without student loans slowing you down.