Thursday, December 15, 2011

How to Combat Education Debt

I once ran a post about colleges that offer a great education for free. To read it, go here. I can honestly say that going to such a college, and getting all my subsequent education for free as well, has put me way ahead of some of my peers who are struggling with figuring out how to pay off student debt plus new debt accrued as part of building a family. Many are still accruing student debt. However, I also realize that not every student is the same and different students have different needs. For many going to a lower cost of free school is not an option (perhaps they did not get admitted, perhaps they feel the experience at a much pricier school is worth it for their specific educational need). Who knows? I am not here to judge. I am here to try and help those who do need to take out student loans to find the best way possible to manage and control student debt before it balloons out of control.

Get a Job Preferably one that is not work study. Average work study rates are $6 an hour. Working a cashier at a local retail store can get you $8-9. Or consider freelancing a bit if you have a talent in a marketable area like tutoring, web design or babysitting. Then put this money away in a savings account or invest it wisely and do not touch it. This will help offset your loan repayment when you gradaute. Working ten hours a week, all four years of college could easily garner you  $13,000 or more. More lucrative jobs like bar tending can earn you more in less time. It could also help your resume. Even working as a waitress means there is some supervisor who can speak about your work ethic and responsibilty when you are applying for your first "real" job. Other jobs like being a paramedic are great experience for preheatlh students who could also use the cash. Obviously you need to know yourself as a student and realize when you have time to work and when you don't. If working is gong to cause you to fail your courses it is not worth it. Most college students can handle working part time if they would jsut get themselves organized.

Save 80% on Textbooks - Free Shipping Both Ways Stop Buying New Textbooks Just because it is shiny and new does not mean it will get you a better grade. There are a LOT of spoiled undergrads out there who turn up their noses at buying used books, taking books out of the library and renting textbooks. I know. I was one. I wisened up quickly. It will cost you a good $500+ every semester to get all of your textbooks new, especially if you need anything that is designed as a textbook or reference manual. Do not delude yourself into thinking these books will be useful later on. They quickly become obsolete. The minute a new edition comes out younger students and bookstores stop buying the older edition (this generally only garners you back half of what you paid or less anyway) and by the time you graduate the information in those books may be outdated as well. Tax law changes. Science advances. New education theory emerges. What you need to know will be provided by your emplyoer or found on the web - not in an old textbook from six years ago. And it will be a loooong time before these things turn into collectibles (if they ever do). Find out from someone who took the course last year if the book is even needed. Buy your books used from the book store or from more senior students. You can flip through them to make sure the hightling or underlining is not too excessive. Use the reserve copy at the library. Or try renting your textbooks. New renting services have popped up making this a very affordable practical option. To learn more, check out rental services like Amazon Kindle Textbook Rental, Book Renter, and College Book Renter.

Stop Putting Things on Your Credit Card Those who read my blog know I am a fan of using credit cards wisely to earn rewards and build credit. However college students often do not fully understand what possession of a credit card means. It does not give you license to buy thing you otherwise would not purchase and you cannot afford. Credit card companies love recruiting on college campuses. Walk away from them. Their offers to lure you in- a bag of M and M's, a snuggie,- are not as good as the offers you can get online. Plus they don't tell you the fine print about their card - is there an annual fee? what's the interest rate? etc. They also don't tell you how to use a credit card responsibly - by only buying things you would have bought anyway and paying it off completely every bill cycle. Just because you have been given a caertain creidt limit does not mean you have to use it. In fact it is better for your credit score if your percent utilization is low. A lot of students are not ready to understand that and therefore rack up huge credit card debt. Do not be one of them.

Get it at Home If you can stomach living with your parents while in college, and if your distance to school allows for it, you can save a bundle by living at home. I know someone who saved enough to take a year off and travel Europe this way. You won't have dorm bills. Even if you can't manage this, try doing things like laundry at home. If your campus requires you to be on a meal plan get everything you can out of that meal plan and not a penny more. Extra food? Take it home for later. Spent all your meal plan allowance? Stop going to the cafeteria and start making food at home or in your dorm room. It's much cheaper and probably healthier for you. I know you don't have a stove. You don't need one. All you need is a sandwich maker, a rice cooker and a microwave. Maybe a refrigerator. And for Pete's sake stop buying coffee just so you can look like a cool college kid studying at the Starbucks.

Waste Not, Want Not Remember how you got all these neat goodies for cheap - like your used textbook and mini fridge? Yep, by buying them off a departing student. Well, when you are on your way out or no longer need an item, sell it. Post it on your campus message board. If your neighbour is leaving all their stuff in the hall for free or saying they will throw it out - grab it. Sell it on ebay if you need to. College students have a tendency to look at things as disposable. Don't fall into this trap. If you bought a brand spanking new mini fridge upon moving in, chances are there is a freshman who is a lot wiser than you who would like to buy one off a departing senior. Of course this means you should take care of your stuff. No one is going to buy that fridge if it smells like feet.

Be An Agressive Scholarship Seeker Go into the office of financial aid or grants and scholarships and ask what they can do for you. If your parents earn too much for you to get aid (like most students) ask about grants and scholarhsips instead. Search for these on the web and on department bulletin boards. No amount of money should be considered too small. If your campus women's history department has an esssay competition for the best short story written with a strong female lead that takes place in 1955 with a prize of $100, well you and three other students are probably entering so there's not a bad chance you get that extra cash. You never know....

College is expensive. This can help defray the cost, but nothing short of a tuition free school is going to get you debt free completely. Minimizing loans is key. Just because you are offered a certain loan package does not mean you should use all that money. In fact it is probably unwise for you to do so. Especially when the loans are given by private banks and are not federal low interest loans. Doing whatever you can to minimize loan burden and save up cash to pay off loans upon graduation is crucial. Sure it might cramp your style a little, but it will give you the freedom to explore your career options, maybe taking a lower paying job with room for advancement, or taking a job in your field of choice rather than something elsewhere that has a higher starting salary but no room for growth, that you hate. Being debt free truly is freedom - freedom to make your own choices and pursue your own path. That certainly won't cramp anyone's style.


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