Debt

Tips for Shearing Student Debt – Before Repayment

When I made the decision to go to college, I knew it was going to be an expensive road. But I never could have imagined just how expensive. After four years of school and four separate loans, I racked up a rough total of $30,000 of student debt.

By comparison to others, I got off easy. Some graduates have loan principles larger than their mortgages. Collectively, Americans owe $1.3 trillion (that’s trillion, with a T) in student loans, and that figure is growing at about $3,000 every second. And with average interest rates between 7-15%, that’s a lot of money to lose, and a lot of time to spend losing it.

Luckily, there are steps you can take to ease the burden, long before the bills come due. Consider these useful tips early, and they will help you later:


1. Live with your parents

It’s better to live with them by choice during college, and commute there, then it is to live at college and be forced to live with your parents because of your debt. This limits your college choices to colleges you can commute to, but depending on where you live, there could still be several options open to you. Plus, you get to pay the cheaper in-state tuition, saving thousands more anyway.

I myself was a commuter; I drove an hour to school every day, and then an hour home at night. Sounds like a lot of driving, but you get used to it. And when you consider the price difference, it’s worth it; I was paying $8,000 a year on tuition, as opposed to $20,000 if I had chosen to live in a dorm.

2. Hunt for scholarships

Doing this may feel like more homework, and the low chance of it paying off can do terrible things to your motivation. But you mustn’t give up; earning even one scholarship can take years off your loans later.

There are some websites (such as Fastweb) that post new scholarships every day. Some are open to everyone and receive thousands of applications, others have strict qualifications that only a few apply for. The right one for you is out there. If you’re willing to put in the effort, it will eventually be worthwhile.

Remember: before starting your search, you’ll need to fill out the Free Application for Federal Student Aid (FAFSA). This is not entirely free; you’ll have to pay a $75 processing fee. But the potential gains outweigh the costs, so long as you put the time in.

3. Save Your Progress

Some students might as well walk around campus with holes in their pockets. They can’t help it; any time they have some extra cash, they waste it on impulse shopping. But that’s not how to pay off your student loans.

When I was a kid, I made the point of saving every $50 or $100 bill I ever got. I kept them in my desk drawer. By the time college rolled around, I had saved up with a measly $500, which was helpful, but not as much as it could have been. If I had put the money into a savings account instead, it would have gained interest over the years. Even if it added an extra $10, every little bit helps.

You might be hitting yourself for not thinking of that sooner. Don’t hit yourself too hard; after all, it’s never too late to start. Find a bank that will offer you a high interest rate on your savings, and put away as much as you can. Then, when the time comes, you may be able to pay off your loan a little sooner.

4. Borrow from Federal first

There are two types of loans; federal, and private. If you have a choice, always go with the federal loans; they normally have lower interest rates, better repayment plans, and programs like loan forgiveness and income-based repayment. Private loans do not have those.

Also, the interest rates on federal loans is fixed; it will never change. Some private loans lure you in with lower starting interest rates, but the rates grow somewhat rapidly.

5. Work part-time while in school

It’s not the 1950s anymore, where you could pay for entire year at college with one summer’s worth of work. But the extra money is still helpful. If you can’t find a job outside of college, most public universities have career centers that can assist you for free. Or, there are jobs on campus that students fill.

Studies have found that students who work 10-15 hours a week actually do better in school, because it helps them develop time management skills. Any more than 15 hours though, and you start to cut into time for academics.

NOTE: If you’re depending on need-based grants to get you through college, be careful about how much you earn. Getting too much money from a job will make you ineligible for these grants. For the 2015-2016 school year, you can’t earn more than $6,400. That number increases every year to adjust for inflation.

6. Pay while in school

Most loans don’t force you to pay while you’re still in school. In fact, repayment doesn’t start until 6 months after you graduate. However, depending on the loan, interest may still be capitalized and added to the amount owed. If left unchecked, you could be looking at an extra 15-20% owed before you even see your first bill.

Check in every once in awhile and pay what you can. Even if you can’t pay enough to eliminate the accrued interest, it will still help you save money down the road.


Remember that mistakes can go onto your credit score, and follow you for 7-10 years. Missed payments, defaults, or other bad marks can make it harder to get a house, a car, a job, and many other important things. As a response, it’s best to pay as much as you can early, before repayment actually starts. To do that, you’ll have to save a lot. Live with your parents if you have to. Buy only used cars. Cut unnecessary expenses. You can visit the rest of our site to see more tips on how to do this.

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