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July 16, 2019

Keeping Student Loan Costs to a Minimum While Earning Your Degree

If you’ve found yourself taking out student loans to cover the costs of your college degree, you’re not alone. In fact, as of 2017, there were close to 45million student-loan borrowers. Although student loans can be helpful in paying college-related costs, they can also cause borrowers tons of anxiety – especially if you rack up tens of thousands of dollars during the years it takes you to complete your degree. 

For example, say you want to become a student housing architect, and your goal is to get an architecture degree. Depending on what type of institution you attend, this type of degree could cost you anywhere from $15,000 to $60,000 per year, meaning you could have a total student loan bill of $60,000 to $240,000 by the time you’re finished — and that’s before interest. No one wants to graduate with a huge load of debt looming. To keep yourself from falling into the student loan debt trap, here are some tips for keeping student loan costs to a minimum. 

1. Apply for Grants and Scholarships

Even if you think you won’t get certain grants and scholarships, you still should try because this is essentially free money — meaning you won’t have to pay it back.  Find out about every grant and scholarship opportunity you’re eligible to apply for, and spend the time applying. Check with your school’s financial aid office for opportunities. You can also ask your parents if the clubs they belong to or their workplaces are offering any grants or scholarships. Applying for grants and scholarships is something you can do the entire time you’re attending college, and they can save you hundreds and even thousands of dollars in tuition. 

2. Consider Taking Community College Classes

Community college classes that will count toward your degree program can cost significantly less than classes at a four-year university. This works especially well if you are just starting college because you can complete your basics or prerequisites at a community college and then transfer to the four-year college. Just be sure the classes you take will transfer, so you don’t waste time and money. If the community college is in or nearby your hometown, you could also save money on rent by continuing to live with your parents for a year or two. 

3. Borrow the Minimum

Even though you might be approved for a nice sum of student loan money, remember it’s a loan. And loans must be paid back — with interest. Don’t allow yourself to be tempted into taking the full amount. Try to borrow only what you need to cover your tuition and books if possible. Borrowing money to cover your cost of living expenses can rack up debt fast. 

4. Cut Costs to Afford Living Expenses and Extras

Sure, it’s easy to take the extra loan money and use it to pay your rent, buy your food and pay for extras, but there are ways to minimize these costs, and you won’t have to worry about paying them back. For example, if you’re renting an apartment, find a roommate or two to share in the costs. Instead of getting takeout or going to restaurants, vow to cook meals at home. Again, see if your roommates will share in the costs. You can also look for free ways to entertain yourself instead of blowing $50 or more each weekend. For example, look into activities at your local park, which can provide free or very economical fun, such as hiking, kayaking and biking. 

5. Consider Getting a Side Hustle

You’re living in the freelancing age, so take advantage of the dozens of available opportunities. For example, if you’re good at photography, writing or web design, you can find paid opportunities that can create income streams of hundreds of dollars a month. You can also tutor, walk dogs, pet sit, house sit or clean houses. Make a list of the skills that you have and figure out how to leverage them to make some extra cash. 

6. Consider Paying Interest Payments

In general, student loan borrowers aren’t expected to start paying back their loans until after graduation. There’s usually even a grace period after graduating where you won’t have to start paying back the loans for about six months. The smart thing to do is to see if you can make interest payments on your loans while you’re in school and immediately after graduating if you can’t start making full payments at that time. This will help keep your loan balance lower and more manageable.

The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.

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