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.

Many high school students don’t realize that they can enroll and take classes at their local community college while they’re still in high school. This ability to dual enroll can save money and time, and can make the university admissions process much easier.

By taking one or two basic college level courses per semester, and one class during the summer during the junior and senior years of high school, prospective university students can eliminate a full year (or more) of university level classes. This strategy will offer two benefits.

First, students can fulfill general education requirements at their local community college at a much lower cost than they can if they wait to take similar courses at the university level. By taking one college course per semester, the academic load is easier to manage. Evening classes often meet just one night per week, leaving time for extra-curricular activities and regular high school homework.

Second, by accumulating college credits while still in high school, students can achieve “transfer student” status. This eliminates the need to compete with other incoming students for a spot in the freshman class. Universities can be more flexible about admissions to their sophomore and junior classes, since they typically don’t guarantee housing for transfer students. Universities may still apply on-campus housing requirements for non-commuter students who are not 18 years of age, so check with the universities you’re interested in before adopting this strategy.

If you’re already in a four-year institution, check out your community college options. If a two-year college is nearby or you plan to spend your summers at home, take courses at the community college over the summer and transfer them back to your four-year institution in the Fall to eliminate the general education requirements. Like four-year colleges, community colleges often offer shortened summer semesters, meaning that you can complete a 15-week class in half the normal time.

You know the old saying: “It pays to comparison shop.” The saying is true, and it applies to more than just goods in the stores. It also applies to student loans. Saving a quarter-point on interest rates over the lifetime of a 10- or 20-year loan can mean huge savings for borrowers, so it definitely pays not only to comparison shop, but also to take advantage of whatever incentives you can find that will reduce your interest rates and eliminate fees.

New student loan lending regulations may be making it harder for students to do some quick but effective comparisons on student loan rates. Since October 1, colleges and universities, which had provided “preferred lender lists” to students must provide prospective borrowers with multiple lender options, if they still want to make recommendations. Some colleges and universities have shied away from this approach to avoid future problems with government regulators.

Unfortunately, the college or university is one of the places students often turn to for assistance in finding financial aid. In the absence of direction from a student’s college or university, students must do more research on their own, which doesn’t often produce the most cost-effective options for students.

To get the most of out of the process, students should take the time to compare student loan rates. The rate, along with a loan’s fees, will determine how much comes out of a borrower’s pocket when the loan enters repayment. Colleges and universities sometimes take other factors into account, like loan servicing, when considering lenders. These other factors may or may not be of value to you, and you may not want to pay premiums for these services. On the other hand, you and your lender are going to be together for awhile, so you might want to consider some of the differences between loan products that may reduce or increase your loan costs.

Aside from the interest rate on a loan, consider the impact of interest rate reductions for direct debit/automated payments for your loans. Be sure to calculate the discounts over the loan’s lifetime to see if this approach makes sense for you. Check for other benefits like on-time payment incentives, fee refunds and other events or actions that may trigger credits to the borrower. Determine what’s most important to you and rate your prospective lenders accordingly.

You’ve heard stories about young college students who have amassed thousands of dollars in credit card debts, and you don’t want to join their ranks! How can you avoid falling victim to the credit card trap while you’re in college?

The more you know about money, credit cards and debt, the better off you’ll be. First, look at what you’re spending. Research conducted at MIT shows that study subjects paid as much as 100 percent more for purchases made with credit cards than they did for purchases made with cash. The research shows that we look at credit card purchases differently than we do those made with cash. Since the payment for the purchase is delayed, we often give ourselves permission to spend more, knowing that we will not be impacted immediately by credit purchases. To get a handle on where your money is going, try going on an all-cash diet for a while.

This approach works, even for those who pay off their balances in full every month. The over-spending isn’t tied to the extra interest charges, but rather to the lag time between the purchase and the payment. By paying for everything with cash, you’ll catch a lot of passive overspending that you may otherwise not even notice.

If you don’t know how to handle cash, learn! Start out small, by managing a checking account. If you are not confident in your ability to do that, ask your bank or credit union for some assistance. They may have consumer education programs that will cover the basics, as well as more in-depth information about money management and long-term savings and investment strategies that you can put into action. If not, check the local community college to see if it offers a course or two on personal finance. You may also be able to find on-line courses that will help you understand the importance of managing money correctly, saving and investing.

Don’t make the mistake of thinking that you need to have a lot of money to invest. Small, regular investments will often take you farther than larger, irregular investments. Many mutual funds, brokerages and banks have regular investment programs that will accept small regular deposits. Having a savings cushion is essential to financial security. Your savings account will help you cover unexpected expenses, but many people try to get by without one, reasoning that they can’t “afford” to save. In reality, few people can afford not to set aside some cash for a rainy day!

Learn as much as you can about finances, and you’ll be measurably better off. Managing your money is often more about managing your spending than about managing your funds. Recognize those spending habits that cause you to shell out extra cash and eliminate them whenever possible. You’ll be doing yourself a great favor and saving yourself a bundle in the process.

Unfortunately, credit card debt is a reality for most American families. According to the Credit Counseling Service, the average family in 2005 had more than $9,000 in credit card debt, an amount that more than doubled from 1995.

If you’re like most college students, you begin accumulating debt while in school and carry that forward after graduation. It’s of little comfort to say that the best way to avoid debt is not to get into it in the first place, but that’s a little bit of salt that’s worth remembering.

If you have credit card debt, the worst thing you can do is add to it. If you can, commit to putting away your credit cards for one, two or three months. Don’t use them at all, and during that time make a concerted effort to increase your payments. At the end of your “test period” see how much you’ve reduced your debt.

If you can’t go that long without using your credit cards, you’ve got a problem. Either you aren’t making enough to make ends meet, or your spending priorities are out of line with your budget. Take a look at each charge on your credit card statements. Realistically, did you need each item you purchased? An emergency car repair will look a lot different than a new handbag or weight set.

Don’t use your credit card for cash advances. You’ll quickly find out that you don’t need these high-interest loans. Not only do they rack up interest charges from the moment you get the cash, they also prevent your payments from reducing your principal until the cash advance debts are repaid.

Look at the interest rate you’re paying on your balance. Shop around and see if you can find a lower interest rate. Beware of “introductory rate” offers. They can go bad on you quickly if you make a late payment or accumulate additional charges during the grace period.

Ultimately, the only thing that will get you out of debt is responsible management of your money. Generally, if you avoid using your credit cards for purchases you couldn’t make with your cash-on-hand, you can avoid the high-interest revolving debt trap that many individuals and families find themselves in. On the other hand, if you can’t go a month without a “must-have” credit card purchase, you’re putting your financial future at risk. That’s something to think about when you go shopping.

Small amounts of money add up fast. Don’t make the mistake of dismissing the opportunity to save a little bit. Here are a few ideas to help you pinch your pennies a bit harder.

Don’t take your loose change for granted! Most people end up with a jar or container in which they store their loose change. As time goes on, the nickels dimes and quarters can really add up. If you don’t believe it, set up your own change jar. Over the course of a school year, add your change to it each night. At the end of the year, roll your change and take it back to your bank or credit union. You’ll be surprised what your “pocket change” has amounted to.

If you don’t pay for your purchases with cash, the experiment won’t mean much to you, but if you regularly use cash, your pennies will turn into dollars before your eyes. Don’t take your coins to one of those coin machines you see in the grocery store. It’s relatively easy to roll your change by hand, and it’s all yours! Don’t waste it on a “service” you can perform yourself for free.

Likewise, if you live in a state that has a bottle deposit law, return your bottles regularly. You’ll benefit from the extra space and you’ll have some extra cash in your pocket. As long as we’re talking about bottles, if you regularly drink soda, buy a two-liter bottle of your favorite soda and pour out of that. You can get a two-liter bottle for about the same cost as a 20 oz bottle in a convenience store or vending machine. You’ll get three times as much soda for the same price. Better yet, make Kool-Aid. You’ll get twice as much drink for about the same cost as a two-liter bottle of soda, and you won’t generate junk for the landfill. Better still, drink tap water.

If you shop at a supermarket, clip coupons and take advantage of whatever special offers you can. Keep track of the money you save with the coupons and transfer it into your savings account every month.

By themselves, small amounts aren’t much, but put them together and they’ll add up to big savings. Get into the habit of looking for ways to save money. Even if you save only five percent of what you would have spent, it’s your five percent!

Going out to the movies is hyper-expensive, so don’t plan to see too many evening shows. Hit the matinees, or better yet, wait until your movie comes to the dollar-theater. Don’t visit the concession stands. It’s the only place I know of, other than the stadium, where you can pay $5 for a glass of soda. Bring your own or do without.

Rent movies instead. You can subscribe to services like NetFlix, which will allow you to create a playlist of the movies you’re most interested in and have them delivered to your door. You can host private screenings with friends, pop your own popcorn and return the movie all for just a few dollars.

Use iTunes to set up playlists for your iPod or for your computer. You can substitute better quality speakers on your computer and have a tolerable stereo system that plays all of your favorite music.

Try the on-campus entertainment. Shows, films, concerts and comedy can be found for a few bucks, or even for free. These events may not feature big-name stars, but they can be just as entertaining. Also, try volunteering for theatrical performances. You’ll get to see all of the performances you work for free.

Use online gaming sites to play free computer games. You can also check out places like Second Life if you’re looking for personal interaction. You’ll be able to find others who share your interests and you won’t spend a dime doing it.

Sometimes you just get the urge to spend, and if you’re used to following through on that, you can soon find yourself in deep financial trouble. If you’re a big-time spender, try developing a set of anti-spending habits to tide you over until the urge passes.

When you feel like going out shopping, go to the recreation building instead. Work out, take a walk, ride a bike, or do whatever physical activity helps get you through the urge to spend.

Reading is a great way to distract yourself and work through the urge to spend. Watch a movie or TV program, listen to a hockey game or some other sporting event. If you have to, tape a few games to watch for just these occasions. Go to the library and check out the newspapers from home or from other cities that interest you.

Invite a friend over and watch a movie. If there’s a dollar theater in town, check out a movie you may have missed at the first-run theater, or see a movie you particularly liked a second time.

Check out the events on campus. Often, you can find an interesting lecture, movie screening, or event that you can attend for free.

Balance your checkbook. Sometimes, taking a realistic look at your financial circumstances helps diminish the urge to spend.

Go to an online gaming site and play games. Many times, you can play single-player or networked games free of charge. If you have access to the Internet, go check out Second Life for awhile. Try to meet someone interesting.

Develop a set of activities you can turn to when you feel the need to spend money that you should be saving for other things. If you can intervene on the habit often enough, you’ll not only save money, but you’ll also retrain yourself to avoid recreational spending.

One strategy some students employ to reduce the overall cost of a higher education is transferring credit from another institution, often a community college or junior college. The first two years of many four-year programs are filled with general degree requirements. Math, science, English, foreign language, health, public speaking, social science, elective and basic computer classes that qualify for transfer are offered by community and junior colleges at a much lower per-credit-hour cost than those offered at a four-year university.

This is a great strategy for students who are concerned that their academic performance may suffer at a larger institution. Community colleges are filled with adult students of all ages. Smaller class sizes and better out-of-class availability of instructors mean that students can receive a richer, more productive academic experience in a two-year setting, while still making progress toward a four-year degree.

Additionally, completing the first two years at a community college offers students the opportunity to live at home and work part-time while still attending school. Living at home can save thousands of dollars in room-and-board costs if Mom and Dad are amenable to the arrangement. Combined with the decreased tuition at a community college, this approach can significantly reduce the cost of a higher education.

If you plan your academic program carefully, you can graduate from the community college with a two-year general education degree, or a two-year degree that complements your major field of study at the four-year institution of your choice. The combination of your two degrees may make you more valuable to prospective employers once you finish your bachelor’s degree.

Many colleges and universities guarantee housing for freshmen, and therefore restrict the size of the incoming class. You may find that it’s much easier to transfer into the university of your choice as a junior, instead of competing for a freshman spot. You’ll end up with a bachelor’s degree from the school of your choice and will still have plenty of opportunity to enjoy the campus life.

For some students, the economic realities of higher education mean working at least part-time while going to school. A part-time job offers the ability to earn extra money for tuition or living expenses. But can you really work and go to school at the same time?

Most decidedly, yes! Working a part time job can consume as many as 15-20 hours per week. It’s important, therefore, to make the most of your working time. Minimum wage jobs tend to require a flexible schedule, and the shifts are relatively short. Also, don’t assume that the only jobs you’re “qualified” for are minimum wage jobs. Plenty of entry-level work will get you more than the minimum wage. There’s yet another reason to avoid minimum wage jobs: you will maximize the amount of money you earn for the time you have available if you can avoid minimum wage work.

If you plan to work part-time, you’ll need to get serious about scheduling time to complete your studies and class assignments. Schedule all of your classes on the same days of the week, even if it means that you’re in the classroom for six or eight hours on those days. If you can go to classes on Mondays, Wednesdays and Fridays, you can work on Tuesdays and Thursdays. You’ll find better-paying part-time opportunities if you can regularly devote a two full eight-hour days per week to work. You’ll also have a better, more meaningful work experience that contributes to your education. You’ll still have evenings and weekends to complete your school assignments, and spend time with your friends.

Choose the most interesting part-time opportunities you can find. Look for jobs that will enhance your studies, work skills or that will provide meaningful experiences once you are ready to work full-time. Look at a part-time job as a non-credit co-op experience and it will become more than just a paycheck for you.

Don’t expect to be given a corner office, but there are some important benefits to working your way through college. If nothing else, part-time work gives you the chance to make contacts, earn positive references and learn how to work well with others in a business environment.