Keeping Your Student Loan Debt in Check

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The cost of going to college is constantly increasing, and many students are taking out student loans. Many of those same students may find themselves with high debt and few job options after graduation. Such a scenario can leave graduates anxious, enslaved to jobs they don’t like, and stuck with high student loan payments for 10 to 40 years post-graduation. 

Therefore, if living life with little debt is important to you, it is important to consider the realities of borrowing money to go to school. It is equally important to recognize the effects that carrying student loan debt can have on your future. This article provides some insight into the world of financial aid and provides ideas for accruing as little debt as possible.

First, it is important to identify some of the misconceptions of student loan debt. There are several traps of thinking that students fall into when taking out student loans. Many students believe, for example, that government loans are “cheap”. While government loans are typically less expensive than private loans, they are still quite expensive. Current interest rates for graduate student loans run between 5.41 and 7.9 percent and, depending on the size of the loans, interest expenses may bump student loan payments up by hundreds of dollars every month. Many students also believe that student loans, especially those from the government, are more “friendly” than other types of loans. In fact, government loans may be accompanied by steep fees for deferments, abatements, forbearances, or consolidations, and, unlike most other loans, a student loan is not automatically discharged in the event of bankruptcy. All of this means that student loans may be both expensive and difficult to discharge even in the event of extreme financial hardship.

Second, it is important to know that the federal government gives students loans with the strict expectation that students will repay them. The federal government could send students to collections, garnish their wages, suspend their professional licenses, withhold their IRS tax refunds, and use other collection methods to recover the money they owe it (

Third, it is important to recognize that both the government and private agencies may have the right to make changes to student loan interest rates and loan and repayment terms over time. Government and private loans could come with fixed or unfixed interest rates, as subsidized or unsubsidized loans, and with or without other guarantees and stabilities. Government loans, for example, might have one interest rate in 2013 and a completely different interest rate in 2014. In some cases, the interest rate for government student loans might even double within a short period of time. Therefore, the loans that you take out for one year might be more expensive (or less expensive in happier cases) than the next year. It is important to know that student loans, no matter their source, could be unpredictable (

Finally, it is important to consider the multiple implications of going to school and borrowing money. Before you decide to borrow money, consider the following:

Student loan debt requires you to find a job that allows you to make your monthly student loan payments; it can therefore take away your freedom to pursue the “right” job.

Student loan debt, even with the lowest available interest rates, can cost you anywhere from $200/month to more than $1500/month, depending on the amount of money you borrowed. Student loan debt may potentially be your largest bill every month.

Student loan debt, depending on the amount you borrow and the size of your monthly payments, could take 30 years (or more) to pay off.

Your student loan debt may be greater than the amount of money you earn through your job. You might not be able to pay for your investment with your salary.

Take all of this into consideration before you apply for school and before you borrow money to fund your education. It is important to first consider your goals in life and to determine whether or not you need to go to graduate school to meet those goals. If you do, you then need to consider whether or not you need to borrow money to get your education. If you do need to borrow money, consider doing the following to limit your debt:

Work with counselors in the admissions office and the financial aid office to determine exactly how much it is going to cost you to earn your degree.

Work with a counselor in the financial aid office to determine whether grants, scholarships or waivers may be available through the college to those who qualify.

Conduct a thorough search for grants or scholarships that may be available to those who qualify from organizations and agencies outside of the college. Apply for as many grants and scholarships as possible, even if you don’t think you’ll receive them.

Consider ways to earn money to pay for college. Consider part-time jobs, work-study programs and assistantships if available and you qualify, and other forms of work that may result in money for school and school-related expenses.

Borrow as little money as possible. If available and you qualify, limit your borrowing to lower-interest, subsidized loans from the government.

Refuse to use credit cards. Credit cards typically have the highest interest rates of any loans and can quickly put you in a scary and overwhelming situation. If you must borrow money, limit yourself to lower-interest, subsidized loans from the government if available and you qualify.

In order to limit or avoid debt, live inexpensively and minimize the amount of money you borrow. The following sections offer some tips for doing so:

Five Tips for Living Inexpensively while in School

  1. Keep your living expenses at a minimum: live with a roommate, keep your utility bills low, buy only what you need, and focus on finding inexpensive or free ways to have fun.
  2. Go to school when you know what you want to study. Don’t waste money by taking courses that don’t contribute in a significant way to reaching your long term goals.
  3. Work while you’re going to school. If you can, find something that either rejuvenates you or contributes to your education.
  4. Spend as little as possible on textbooks and other school supplies. Be frugal. Buy used books from book-sellers outside of the school, reuse folders and other supplies, and buy only what you need.
  5. Again, refuse to use credit cards. Credit cards cost students interest every month and can quickly raise monthly expenses above a comfortable limit.

Five Tips for Minimizing Student Loan Debt

  1. Apply for as many grants and scholarships as possible, whether you believe you’re eligible or not.
  2. Apply to schools that may offer an abundance of financial aid to those who qualify, including grants, scholarships, tuition and fee waivers, work-study programs, stipends, etc.
  3. Apply for work-study programs, assistantships, on-campus employment, and other forms of employment that may be available to those who qualify that help lower the cost of tuition.
  4. Consider enrolling in a school in the state you have residency. Don’t pay out-of-state tuition.
  5. Earn a degree and work in a field of public service that may qualify you for Loan Forgiveness through the government.

6 Tips for Being a Great Graduate Student without Spending Tons of Money

  1. Spend your time waxing philosophical; or mathematical; or business; or anything that piques your interest and stimulates your mind. Rather than spending your time (and money) partying, spend your time (and no money) thinking about the world, how it works, and how you contribute to it.
  2. Study hard and supplement your studies with free books, movies, and talks on campus, at your local library and through non-profit organizations and agencies.
  3. Pass your courses—all of them. Don’t waste money by repeating courses.
  4. Take the courses you absolutely need and skip the ones you don’t. Take only the courses that you need to earn your credential. If you find yourself interested in a subject or course that is not necessary to earn your degree, skip it and find a way to study the material on your own, with a group of friends, or through a non-profit organization.
  5. Find ways to have fun and earn money. Work for an outdoor adventure company, guide study-abroad trips, and do other things that allow you to have fun, broaden your horizons, and earn money for school.
  6. Work really hard now so that you don’t have to work as hard later.

About the Author:  Annie Rose Stathes holds a B.A. in International Affairs and an M.A. in Political Science from the University of Colorado, Denver.  She is currently an instructor of writing at Fort Lewis College in Durango Colorado.

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