The average American college graduate in 2016 walked the stage with $37,172 in student loan debt. That translates to $351 monthly payments on average. Student loans have become the norm, and huge debts are expected.
Let’s break that cycle. Here are five ways that you can leave college and debt behind and look forward to a debt-free future.
1. Parents: Be Honest With How Much You Can Contribute
Parents want to protect their children. That’s natural. When it comes to finances, it’s no different. The tendency of parents to hide their financial status from their children may be done with good motives, but it can lead to extensive student debt.
According to Kristina Ellis, author of “How to Graduate Debt-Free,” it is best to be upfront with them.
2. Students: Don’t Choose an Unaffordable College – Even If Your Heart Is Set On It
A common misconception is that scholarships aren’t available for everyone. While sports and academic scholarships first come to mind, there are multiple options available for all sorts of purposes – including having a certain last name, for being right or left handed, or for being short. Research all the options available at your school of interest before scratching it off your list.
If your school of choice is still out of financial reach, consider other options. The burden of college debt after graduation isn’t worth the four years of college at any particular school. While it is difficult giving up a dream to attend a certain university, the amount saved in student loan debt during the decades after graduation is worth giving up your favorite school.
3. Students: Think Before Taking Time Off Between High School and College
Many students are attracted to the idea of taking an extended break between their high school graduation and first day of college. Volunteering, backpacking, and interning are all understandable reasons. However, if you plan to save for college prior to attending, a word of caution must be made.
According to the Student Income Protection Allowance, $6,400 is the income limit for students before it affects their financial aid. If you plan to make above $6,400 before entering college, your financial aid eligibility is reduced 50% for every dollar made.
Better alternatives include searching for financial aid opportunities through student loans, grants, and scholarships and working while in school.
4. Students: Work During College
Holding down a job while going to school requires time management. However, students who work 10–15 hours weekly are more successful than their unemployed peers.
The benefits of gaining employment history during college include extra income, an attractive resume, and increased discipline.
5. Students: Do What You Love After You Graduate
Job security is a popular phrase thrown around in the professional world. For the post grad with no income and impending loan payments, it’s a likely determinant of which job to select.
Graduating with minimal debt gives the college grad freedom to turn down secure jobs they don’t like while picking less secure jobs they find exciting. Also, if a family is still in the future and currently not a reality, a college graduate may assess enjoyment over income.
If college debt is either minimal or non existent, a college grad isn’t strapped to choosing a job only for security and income to pay off debt. Therefore, less debt equals more freedom to pick a lesser paying and secure job that brings greater satisfaction.