Students who are applying to college have a lot to think about: where they want to attend school, what they want to pursue for their major, and how much the whole experience is likely to cost.
Thinking about finances is definitely a wise idea; a U.S. News & World Report article refers to the National Center for Education Statistics, which found that tuition plus expenses at a private, non-profit four-year school runs around $35,000 a year, or $140,000 a year. Because college can be so pricey, many students apply for student loans. While these types of loans can help make the dream of college a reality, they can also leave new graduates swimming in debt. As a result, it is imperative that students do their homework about the loans, learn how to pay them back as quickly as possible and that protecting your credit is a must.
Choose Your College
First, aspiring students need to decide where they want to attend college and decide how much it will cost based on the University. As an article on NPR’s website suggests, this involves really being honest with themselves and asking why they want to go in the first place. They should also understand that a well-known (and very expensive) Ivy League college does not necessarily lead to success. Future employers and graduate schools, the article points out, want people with experience and a wide range of skills, not a specific collegiate pedigree.
Choose the Best Repayment Plan
Those who apply for and get student loans do not have to make their first payments until six months after they stop taking courses, according to a CNN article. Fortunately, by choosing the best repayment plan, getting out of debt can happen sooner rather than later. For example, the CNN article noted an income-based repayment plan will determine payments based on what students are earning. As of 2012, this was capped at 15 percent of disposable income. As a bonus, graduates who take a job in the “public servant” arena — like fire fighters and teachers — will have their balance forgiven after making 120 on-time payments.
Another option is the standard 10-year repayment plan, which the CNN article says is the fall-back choice for students. Assuming a debt of about $25,000, monthly payments generally run just under $300. In addition, some students opt for the graduated repayment plan, which is a nice option for those who expect to be making more money over time. The first payments are low, but then are raised gradually so that the loan is still paid off in 10 years. As a bonus, there is no penalty for paying back student loans quicker than the schedule indicates. This will help graduates get out of debt sooner and pay less interest overall.
Pay Off the Loan Quickly
One way that students can pay their loans off as quickly as possibly is by establishing good financial habits while they are still in college. An article on U.S. News & World Report’s website cautions that students should be careful about applying for and using credit cards, and to keep close tabs on where their money goes. As many people find out the hard way, pizzas and coffees can add up quickly. By setting a weekly budget, college students can learn early on about keeping track of their income and staying on top of their finances.