Student Loan Dodgers

Most students leave college with some debt - whether it’s student loan debt or credit card debt. Additionally, students may take on other obligations - like rent and car payments - as they set up their new life after school.

All of this debt may seem overwhelming, or even downright depressing, but it doesn’t have to be. The best debt is no debt at all, but most student don’t have that luxury. If debt isn’t avoidable, make sure it’s manageable. Making debt manageable means living within your means.

While you’re in school, take stock of your borrowing habits and make sure you’re not taking more than you can repay. Currently, the average student loan debt is around $25, 000. If you’re considering larger-than-average loans that push your overall obligation higher than the average, proceed with caution! Your loans will most likely accumulate interest while you are in school, and you’ll end up with much more to repay than what you borrowed. Learn about your student loans and keep track of how much interest is accumulating while you study.

Don’t use a credit card as a substitute for cash! It’s not, and using credit in this way will likely earn you a lot of expensive debt. Credit should be used sparingly. If you’re issued a credit card, ask the issuer to limit the credit line to an amount you can likely repay within a few months. Use it only for emergencies and pay the balance off at the end of each month. If your credit card balance gets ahead of you, stop using the card until you can pay down the balance.

Make the most of Federal student loans. Everyone is eligible for them and they carry a much lower interest rate and more favorable repayment terms than non-government loans. They do have lending caps, so borrow carefully. Also put some effort into finding scholarships. You may need to spend significant time doing research, but in the end, the process should pay dividends in two ways: first, if you’re fortunate, you’ll turn up some free money for college. Second, you’ll hone your research skills, which will come in handy for your classwork.

Learn about the starting salaries for jobs in your field of study and determine whether or not you can make big loan payments on what you’re likely to be earning. If the answer is no, let that serve as a guide for how much you can safely borrow while you’re in school. If you still can’t make ends meet without borrowing heavily, consider transferring to a less expensive school, or one that’s closer to home. Most students get themselves into borrowing trouble by trying to cover their living expenses with loans. A better approach is to live conservatively and work part-time to earn the cash you need to get by. Work full-time in the summers and save, save, save.

Debt can be managed if it’s accumulated carefully and with consideration for how much you can reasonably expect to make after college.