How to Avoid Student Loan Debt? Useful Tips!

Did you know that the average student loan debt for American graduates was $37, 062 in 2021? 

You also probably don’t know (or want to know) that Americans owe $1.59 trillion in student loans. Talk about scary! To paint a more global picture, the average student debt is £35,000in the UK, $22,000 in Sweden, $21, 000  in Canada, and $9,390  in Australia.

Student loans can cause a great amount of stress and can be very overwhelming. However, even with the rising price of tuition, we can still show you how to avoid debt or how to reduce student loan debt, if you already have accumulated some.

If you follow these tips, you can successfully manage your school finances rather than becoming another scary statistic.

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Facts about Student Debts

To give you an idea of just how serious student debt has become, here are some US and global student loan debt statistics.

US Facts:

• US student loan totals have reached over $1.73 trillion
• $1.59 trillion is in federal loans
• 62% of graduates have student loan debt
• In 2019, the average student loan debt was $29,950

(Data source)

Global Facts:

• UK graduates hold the highest amount of student loan debt in the developed world; the average student will accrue over 50,000 pounds of debt before graduating (Source) 
• Total student loan debt in Canada is at least $18 billion (Source) 
• The average student loan debt per borrower in the Netherlands is $23,800 (Source) 

Things to Know Before You Start Your Degree

The thing about student loans is that they seem like a good idea at the time you sign up. They allow you to choose the school you want, be able to live comfortably and have the freedom to study full time.

Start working and start saving

The best and most effective way to avoid debt is by earning an income and paying for school by yourself. We understand that is not always possible. Tuition prices can be very high, and most students can’t make enough to afford full tuition. But remember, paying for some, even half, will make a huge difference. The sooner you start to earn money and are able to finance your schooling, the less dependent you are on banks. And no one wants to be a slave to the banks!

Focus on academic excellence

Another really smart way to avoid debt is by applying yourself to the best of your abilities in high school. If you can focus on your studies in high school and excel in your courses, you may be eligible for scholarships and grants. These can sometimes fund your entire tuition! And if not all of it, they can be a major help. The amazing thing about scholarships and grants is that they are essentially “free” money. Unlike loans, they don’t have to be paid back!

Apply for scholarships and grants

Every college or university has its own scholarships and grants that students can apply for. If you already have a school that you are planning to attend or are interested in, always search their website to see what scholarships and grants they offer. You should apply to all of them if they are relevant to your situation. There are merit-based and needs-based scholarships to choose from.

Not all scholarships have to be from the school you attend, though. There are external programs offered to students. International Student offers an online search for international students to find scholarships.

Choose an affordable college

As the cost of college rises globally, it’s important to note that affordable options do still exist! For example, the University of the People is an entirely online and accredited college. One of our primary differentiators is that we are tuition-free! Without tuition, you only have to be able to cover relatively minimal costs for administration fees. Did we mention you can also use financial aid or scholarships to cover these costs should you need assistance. Tuition-free universities are helping to completely change the name of the game for students who wish to know how to avoid student loans debt.

Countries in Europe, like Germany and France, also offer free university tuition.  Check out this guide for some of the best universities in Europe with free tuition. It’s just one of the many reasons why American students choose to study abroad.

Apply for financial aid

Whether you live in the US, Europe, or elsewhere, every country has its own government student aid program that is aimed to help you with tuition costs, cost of living, books, and more. It’s a good idea to check with the country that you either live in or are planning to study in. Here are a few examples of what is offered to students:

• In America: apply using FAFSA 
• In the UK: you can apply for student finance services
• In Canada: there is student financial assistance
• In Japan: JPSS has programs for international students to apply for financial aid

Applying for Student Loans

If you’re looking to apply for a student loan, it’s best to go about it wisely. There are some recommendations for how to accomplish this, including:

•  Try not to take a loan amount that is higher than your expected first year’s salary
• Federal loans are a better option over private loans because they have fixed interest rates
• Learn about deferment periods to find out when student loans need to be paid back or if there is any chance for loan forgiveness 

If You’re Already Studying

You may already have started studying and are well on your way to earning your degree by the time you read this article. You might be worried about how you’re going to pay for the rest of your schooling and think that a student loan is the only way.

But there are ways to finance your studies without getting knee-deep in debt. You can make wiser choices from now on and look to different sources for help. Check out some of these suggestions for how to manage your student finances once you’ve begun studying:

Work part-time while studying

If you’re studying part-time, then working part-time will be the best and most cost-effective way to fund your schooling. But we know that many students study full-time with hopes to finish sooner and start working. So if you study full-time, you can consider working full-time in the summers or on occasional evenings. There are also remote jobs that you can do from home or on a freelance basis that can help earn extra income and not be too overwhelming or demanding.

Budget: find ways to be cost-effective

Make choices that are more cost-effective to save more money.

This could include buying used textbooks or finding free ones. Here are some ways to score free textbooks in college.  If you’re going to live on-campus or close to the university, live with roommates and cut on rental costs. Buy your own food and cook at home as much as possible. Eating out for every meal, or even once a day really adds up. Also, try to avoid opening up too many credit cards. There are tons of credit card companies out there with low student fees. But it’s just like the loans — they seem appealing at first, but the debt adds up. You don’t need to be adding any more debt!

Pay in installments rather than loans

If you choose to pay the college directly without a loan, it’s best to know about their payment plans. Most colleges offer installment plans that are interest-free and might have only a small fee. Choosing to pay in installments rather than by loan can help avoid debt. Paying in installments is paying in portions rather than having to pay it all at once.

Crowdfunding

You can turn to your family, friends, and others around you to help fund your education.

Crowdfunding is relatively new in the world of student loan debt, but it’s becoming more and more popular as students are becoming more creative in their attempts to study and not fall into debt.

Employer tuition reimbursement

There are companies that are willing to pay either all or part of an employee’s tuition. It’s a win-win situation. For employers,it builds loyalty and longevity in the company, and for the employee, it’s an obvious plus to not have to pay for tuition! However, these programs depend on some variables, such as the cost, your grades, and eligible programs.  If you don’t yet have a job, consider the companies that offer tuition reimbursement. Here’s a look at some companies that offer this opportunity, including Starbucks, UPS, Wells Fargo, Verizon, and more.

What To Do If You Already Have Debt

Of course, there’s a big chance that you might already have some debt on your plate. If you already have a student loan, at least you know that you’re not alone. But don’t worry, there’s still hope! There are many ways to ease the pain of paying off loans. 

Consolidate your loans

Consolidation is a financial strategy for loans and credit card debts with high-interest rates. It reduces interest rates and monthly payments to make the payoff more manageable.

Student loan refinancing

Refinancing means you exchange your current federal and private student loans for one new single loan with a lower interest rate.

Make an extra payment

An extra payment!? Sounds crazy, but it can help in the long run because it can help save how much you have to pay in the end. Take this example: With only an extra $100 per month payment on your student loans, you would save $3,048 and pay off your student loans 2.83 years earlier. If you can make it happen, it’s definitely worth it!

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Wrapping Up

We understand how costly university can be, and we’ve seen how massive the student loan industry has become. That’s why it’s so important to know your options for how to avoid student loan debt as much as possible.

Hopefully, with some of these tips, you can complete your studies without the heavy burden of being a slave to banks or other financial institutions. Go forth and prosper!

To find out more about our tuition-free programs at the University of the People, click here.  But the debt creeps up on you and you find yourself in a deep problem. So let’s try to avoid that! Here are some ways to manage student debt before you start studying for your degree.