Huge numbers of young adults are grappling with massive student loan debts. As students, they are typically less informed about debts and rarely know how much debt they can sensibly absorb without throwing their future into jeopardy. In fact, unaware of the potential impacts of huge loans on their lives, many students seldom consider alternatives to the loans and often have student loans as their principal source of funding for their education. To avoid complicating their lives with huge student loan debts, students should take their time to predict what the future holds and to figure out how they will be paying the loans from their salaries. By knowing what the loans would mean to their lifestyles, students may be more cautious and prudent when choosing student loans. Below are 4 critical ways you can limit your student loan debt.
1: Relate Your Debt to Your Future Pay
Student loans are repaid from post-college paychecks. Therefore, students should check the average salaries paid out to professionals in the career they are planning to pursue in college and determine the amount of loans that can comfortably be paid out of such salaries. In fact, students should figure out what they expect to earn per month after graduation and then break the earnings down by factoring in monthly student loan payments. A good student loan should take around 10% of the projected monthly income, but a student loan plan that would require repayment with over 15% of a monthly salary should be ignored. Indeed, students should relate their loans to their potential earnings in order to limit their future debts.
Apply for Scholarships and Grants
Scholarships and grants do not impose debt burdens on students after graduation. And since scholarships and grants can cover for substantial portions of college education costs, including tuition, living expenses, travel and accommodation, students can rely on them to limit the amount of loans they take from Federal and private lenders. Moreover, some scholarships can cover the entire cost of college education and help students to be completely debt-free after their graduation. Therefore, it is important for a student to search for relevant scholarship offers aggressively, make timely applications and complete all the requirements of such applications in order to boost their chances of winning the awards.
3: Making Extra Payments
Breaking down a monthly loan payment bill into bi-weekly half-payments can result in additional full payment by the end of the year, which will in turn limit the amount of interest over time. For instance, if you owe one full monthly payment, there will be 12 payments to make per year, but if you make double payments every month of just over half of the full monthly payment, you will have made extra loan repayment by the end of the year. This way, you will save more on the interest due on your student loan repayment.
4: Participate in Voluntary Work
Giving back to society is not only good for your soul, but is also good for your student loan repayment. There are several organizations that have developed models for college graduates to donate their skills and time as volunteers in non-profit projects in exchange for their student loan repayment. Participants in such models usually receive $10-$20 per hour in student loan repayments, depending on the skills and expertise required in the projects they participate in.