If you are thinking about taking out student loans for college, it is important that you sit down and think about your options prior to signing any contracts. Many students find themselves buried to their eyeballs in debt because they end up not paying attention to the amount that they are borrowing.
Remember, all student loans must be paid back and you are responsible for the debt, whether or not you can afford it. Below, we will go over some of the different ways that you can save yourself money on your student loan debt.
Only Take Out What You Need
The first way you can save yourself money on your student loans is to only take out the amount of money you need. For example, if you are offered $5,000 for one semester, but you know you only need $3,000, do not take out the whole $5,000.
Taking out too much money is how students find themselves drowning in debt when they are out of school. That $5,000 does not seem like a lot now, but five semesters and you already owe $25,000 and likely do not even have your Bachelor’s degree yet.
Exhaust Free Money Options
Before you simply apply for loans and accept them, make sure that you exhaust all free money options that are available to you. When we say free money options, we are talking about scholarships and grants.
For example, see if you qualify for the Pell Grant. Students with a financial need often qualify for this grant and you can receive up to $5,000 or more. Sometimes, depending on your program and the school you choose, you may only need to take out a small loan to finish paying off your college tuition.
Pay Interest While You Are in School
The next thing you can do is pay off interest while you are in school. If you receive federal student loans, you can opt in to pay interest while you attend school or you can opt to not pay it until you start making actual payments.
To keep your costs lowered, you should pay the interest. Most interest is only a few dollars per month and no more than $50. If you can afford it, make sure you send the payments. Trust us, interest can add up to thousands of dollars over the course of your loan.
Create a Budget
A budget will help you properly plan to make your student loan payments and also save money for your future. If you are working a job that does not pay a full livable salary, you will quickly find out that you have to give up some of the things you love the most to pay your debt down.
While these sacrifices may be hard, you will definitely thank yourself later for living a year or two in a tough position to not have to worry about paying your student loans when you are 40 or even 50.
Make a Plan for Yourself
Lastly, you need to sit down and make a plan for yourself and this plan should include what your goals are and how you plan to save and budget. It may seem easy to make a plan, but as you get into the meat of it, you may struggle to figure out how you will pay for some bills and how you will afford to eat.
While you consider and write out your plan, think about some of your payment options as well. Federal student loans offer an income-based repayment program that structures your payments based off of the amount of income you make per year. This is beneficial for you because if you have a tough year, your payment amount could essentially be $0.
While paying down your student loans is not something you want to do, it is something that needs to be done. The above five tips will help you save as much money as possible on your federal student loans. When you do consider a loan, make sure you think about it first and evaluate your situation BEFORE you just sign the contract. Planning will help you make wise decisions.