Student Loan Debt: 8 Ways Prevent Too Much Debt in College
In a country that increasingly values postsecondary education and training, students and parents often aren’t sure where to start when it comes to paying for higher education. But you’re not alone! There are many resources to help students pay for college.
As a parent of a current or future college student, you may have questions about how much student loan debt your child is about to incur during college. With careful preparation, responsible budgeting, and intentional repayment plans, it’s possible for your child to graduate college with a limited, workable amount of student loan debt and the confidence of knowing they’ll be able to pay it off quickly.
Let’s break down eight of the most important steps to making that scenario happen.
Be Selective About Choosing Colleges
Visiting college campuses and choosing schools is an exciting time for students and parents. However, with college tuition costs rising over the past 20 years it’s important to take a close look at the cost of attendance at each school and factor that information into the college selection process, as well as the institutional aid they may be able to offer your student.
Which colleges make sense for your child’s future? Do they offer the right majors to match their education goals? Are the schools in-state and possibly offer more affordable tuition rates to local students?
In addition to those questions, it’s also important to remember that four-year colleges are not the only options. There are many careers that only require students to complete a two-year program at their local community college.
Many North Carolina community colleges also have guaranteed transfer or co-admission programs with four-year schools. This is a good way for students to earn their associate degree with the peace of mind that they will be accepted to a partner college or university to earn their bachelor’s degree.
Apply for Financial Aid
The first resource all students and parents should utilize to pay for college is the Free Application for Federal Student Aid, or as it’s more commonly known — the FAFSA. This is one-stop shopping for grants and scholarships that students don’t have to repay, low-interest federal student loans, and work-study programs.
While the FAFSA helps students find valuable financial aid to pay for college, sometimes it’s not quite enough to cover all of a student’s college expenses. Students who need more money can also research additional scholarship and grant opportunities.
Research Grants and Scholarships
As we mentioned, completing the FAFSA will help your child qualify for financial aid, which may include scholarships and grants. However, this is just the tip of the iceberg when it comes to free money for college!
Encourage your student to reach out to college financial aid offices to see what scholarship opportunities may fit their needs. They can also search for grants and scholarships on the CFNC website.
Some schools also offer merit scholarships for students who meet certain standards. These could depend on high school grades, standardized test scores, majors, or other criteria. Small or large, scholarships are out there for somebody to earn, and every little bit adds up.
Working Through College
As a parent, you want your child to focus on studying while they’re on campus, but experts say students who work an average 10 to 20 hours per week have better grades, time management skills, and are more likely to graduate.
Many businesses located on or near college campuses count on this part-time workforce, so it’s worth your child’s time to put in a few applications when they arrive on campus. The extra money students earn during the school year can help cover personal expenses and lower the amount they may need to borrow in student loans. Your student my also want to explore Work Study programs at their college; it’s a great way to earn money and build a resume. Most Work Study jobs are on college campuses and are need-based.
Research Forgivable Student Loans
In North Carolina, students who are interested in a career in nursing, teaching, allied health, or medicine can apply for Forgivable Education Loans for Service (FELS) to help pay for college and earn their degree with a minimal amount of student loan debt.
Eligible students agree to work in North Carolina after graduation. FELS recipients work one year for each year of funding they receive.
Apply for Alternative Student Loans
Once you and your child have exhausted other college funding options, you may want to research private or alternative student loans. The private student loan market is big business, and there are a lot of options, so you’ll want to do your homework before agreeing to a student or parent PLUS loan.
Many private student loan programs are offered by large for-profit companies where each loan is designed to make the company and its shareholders money. The NC Assist Loan program is operated on a nonprofit basis, meaning that there are no shareholders to satisfy or big corporate earnings reports. Our top priority is helping North Carolina students afford college while keeping costs as low as possible.
NC Assist Education Loans are available to students and parents with a North Carolina connection, and the loans can be used at in-state and out-of-state schools. With competitive fixed rates and no fees, NC Assist is often a better deal than some federal loans when you compare rates and fees.
Pay Loan Interest While in School
Whether you and your student have direct, private, or alternative loans — or more likely a combination of several loan products — paying student loan interest while your child is in school can help reduce student loan debt.
If student loan payments are deferred while your child is in school, interest may still be accruing on the loan. If the interest isn’t paid, it’s added to the principal amount of the loan, which could mean hundreds or thousands of dollars over the life of the loan. So, if the interest payments work within your budget, it may be wise to consider paying off the student loan interest while your child is in school.
Make Repayment a Priority
For most parents and students, student loans will be part of the college journey. Make sure your child understands that journey doesn’t end until their student loan debt has been repaid.
When they’re starting a new career, it may be difficult to make more than the minimum payment, but they can always make extra payments when they get money for birthdays or holidays. They can also get a side hustle and put all their earnings to quickly repay loans.
Considering repayment is something parents and students should consider and discuss before taking out any loans. Use our helpful loan estimators to plan how much to borrow for college expenses, so you only borrow what you need. Now that you know some ways to prevent too much student debt in college, you can be a smart shopper and find the right student loan for your family’s needs.