In the United States, Arizona State University’s eCollegetimes has estimated that about 80 percent of college students are taking on loans to pay for higher education. What can students do to avoid the trap of graduating from college with a mountain of debt?
Six Steps for Avoiding College Debt
First of all, parents should prepare for their children’s university education with a 529 College Savings Plan.
Second of all, apply for financial aid in the form of college grants on the federal and state level. Remember that in-state tuition at public colleges and universities is much cheaper than out-of-state tuition or tuition at private colleges and universities. The application process for 2013 college grants is already under way.
Third of all, apply for scholarships. Be in touch with your high school counselor and apply for scholarships for high school students while still in high school and then apply for scholarships to help pay for college during your senior year.
Fourth of all, take on some jobs while in college. In addition to work-study programs, college students can earn good money especially during summer breaks. Try working in sales, construction jobs, painting houses, national parks, restaurants, resorts, amusement parks, and hotels, for instance. Jobs such as bellman, local tour guide, and waiter or waitress can pay good tips and help students keep out of debt. During the scholastic year, college students can also work as tutors, local guides, waiters, waitresses, sales agents, tax preparers, musicians, and in a variety of positions to help them pay for college expenses. Write down a list of your skills and hobbies and see where you can use them to earn money with part-time jobs or free lancing. If you have web skills, you can market them on websites such as oDesk.com.
Remember to budget during college. If you do have success earning decent money from a job while in college, then remember not to be wasteful with the money. You may need to spend that money on rent, books, tuition, or insurance. If you do find yourself getting ahead instead of falling behind, stash away some of the money for retirement with a plan such as an IRA. It’s never too early to start saving for retirement. In addition, it is a good idea to take advantage of the many events on campus which offer free food. Check with your students services offices, or student union to find a calendar of events from different associations, groups, clubs, lecturers and so on. Many of these events will feature catered food for all the participants present.
Student Loans are Only a Last Resort
As a last resort, take out a loan. Be careful about which kind of loan you take out however. The best kind would be an interest-free loan from family members. As far as taking out a loan with interest is concerned, consider the Perkins Loan over the Stafford Loan. The reason is that the Perkins Loan generally has a lower interest rate than the Stafford Loan. In addition, the Perkins Loan could be converted into a cash grant (and not need to be repaid) if certain conditions are met after the student completes college and enters the workforce, if the kind of employment qualifies for such a conversion.
With good planning, parents can make sure their children graduate from college debt free. Even if students enter college without any support from their parents, it is still possible to earn a college degree without being burdened by years of debt.