Planning Ahead: 3 Tips For Limiting student loan debt
Todays college graduate leaves school with more than ,000 in student loan debt. That figure is just shy of the average price for a new car? ,500, according to the National Automobile Dealers Association. Unfortunately, the amount of debt people take on when buying a car or going to college turns out to be one of the few similarities between the way people finance their cars and the way they finance their college educations.
Understanding how the strategies you use when shopping for a car can also be applied to planning for your college degree can help keep you from getting chained down with ballooning debt from student loans that mushrooms from year to year.
What Shopping for a Car Can Teach You About College Loans
Few new car buyers go to a showroom without first having done research on the model or models theyre considering. For some buyers, the most important considerations are initial cost, fuel economy, safety, quality, reliability, brand, comfort, and seating capacity. Discussions about financing the vehicle come later, but those negotiations are no less important to the process of buying a car. (After all, few purchases require one to spend ,000 in one sitting.) Auto dealer know that simple things like manufacturers incentives, rebates, and financing deals can make or break a sale.
Students in the market for college loans dont typically take this same careful and researched approach. In fact, many students enter college without even knowing what they want to study.
If youre like many students, youll begin taking out student loans in your first year to help cover your college costs, and you wont decide on a major until your sophomore or junior year. By the time you declare your major, then, youll already be in debt and perhaps even have taken classes that wont apply toward your major requirements. Getting yourself in this situation is the equivalent of taking out a car loan without having picked out your car yet and then paying for the test drives.
If you find yourself short on the necessary credits for your major by the time graduation rolls around, adding as little as a single semester at the end of your fourth year can result in tens of thousands of dollars in added costs, once the interest from a semesters worth of additional student loans is factored in.
But following three simple tips, gleaned from smart car shopping strategies, can help you keep your college costs under control and minimize your debt from student loans.
1. Be Prepared
A better approach, if youre going to be financing your education using student loans, is to determine a field of study ahead of time. By doing significant research on employment and college programs prior to applying for admission, youll be better prepared when it comes to choosing a school, declaring a major, and charting your course picks? all of which should also put you in a better position to make borrowing decisions and to plan how much money youre going to need from college loans and how youll repay those loans once your graduate.
2. Shop Smart
Knowing what you plan to study will help you choose the school you attend, and heres where you can save big. Some lower-cost schools have better specialized academic programs than their higher-cost, more well-known counterparts. By balancing the cost and quality of a schools particular academic program against its broad-spectrum reputation, you can avoid spending big bucks for a status degree and get the most return, in terms of learning and job training, on your time and money investment.
Make sure you also apply your research and smart-shopping techniques to your student loans themselves. Youll want to maximize your available federal financial aid and take advantage of low-cost, lower-interest government-issued student loans before you turn to pricier non-federal private student loans.
3. Do Your Research
Choosing a field of study before starting college can also help you estimate how much youll be earning after graduation. Simply knowing the average starting salary and employment prospects for new graduates in your field can help you determine whether its reasonable and safe to take out student loans.
Using this strategy, you can also develop Plan B options for ancillary fields that will allow you to make the most of what youve already studied. Use your Plan B outlook to add academic, extracurricular, work, and internship experiences that broaden your knowledge base and enhance your employability upon graduation.
Your research may reveal that the average starting salary in your chosen field is very low, or that the average time between graduation and finding gainful employment exceeds your six-month grace period before your student loans go into repayment. (Get current average starting salaries for hundreds of majors and academic degrees in this Fall 2010 National Salary Report.)
Knowing what you can expect can help you plan repayment strategies for your college loans and may help you refrain from amassing a level of student loan debt that your post-graduation salary wont support.
By approaching college financing and student loans with a more research-oriented and smart-shopping focus, youll be in a position to save a lot of money by finding the right-priced college program for you, improving your employment prospects after college, and avoiding common traps that can lead to over-borrowing and more student loan debt than you can handle.
Jeff Mictabor is an enthusiast on the topic of student loan issues in the news. He has been writing for the past 10 years for a variety of education publications. He now offers his writing services on a freelance basis.
Source: http://www.onlineloanfirm.com/planning-ahead-3-tips-for-limiting-student-loan-debt-5/
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