8 Debt Reduction Strategies for College and University Students

8 Debt Reduction Strategies for College and University Students

Saving for College

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Once again I have been neglecting the post-secondary portion of my blog audience.  Considering I have two children who are currently in University, I do understand the many issues and stresses which College and University students face.  As an educator and parent the last thing I want for my own children or students is to graduate and be loaded down with debt.  It takes time to establish yourself after graduation and to be immediately saddled with a suffocating debt load is not something young people should have to endure.  In a recent survey it was found that the “average University student leaves campus with close to $28,000 in debt, and takes an average of 14 years to pay it off.” (www.ratesupermarket.ca).

Considering this grim statistic, I have determined that my own children will graduate from University with zero dollars owing in debt.  This is not something I can guarantee on my own however as it involves input, cooperation and sacrifices from everyone…particularly the students themselves!  That being said, I have come up with 8 debt reduction strategies which families can utilize to ensure students graduate from College or University optimistic about the future, not just bogged down with a stifling debt load.

1.  Choose Schools Wisely: The end goal of obtaining a College diploma or University degree is to secure employment when you finish.  Therefore, you need to choose an institution which is respected and has great programs.  However, many institutions that have this also offer very affordable prices, while others do not.  Just like everything else it will really pay to shop around.  Also, look for Colleges or Universities which have great scholarship programs.  Scholarships, grants and bursaries can go a long way in significantly reducing your debt.

2.  Study Hard:  It is not enough to select a College or University just based upon their scholarship program.  You need to make sure they have scholarships or bursaries which are rolled over from year to year as long as your GPA is maintained.  In other words, studying hard and getting good grades can be very cost efficient for you and has the potential to make you a lot of money.

3.  Stay Away From Credit: In all truth, credit card companies love students.  Often the acquiring of a credit card will be the first real taste of “financial freedom” for students.  However, it will come at a great cost and students should not ever apply for a credit card.  They are usually at exorbitant interest rates and will leave the student with much more debt on top of anything acquired through a student loan.  Avoid the temptation!

4.  Budget and Save Money:   It is really not what you earn…it is what you spend! Ultimately, the way you need to reduce your debt is to drastically cut back on your variable expenses (those that are not fixed, like a mortgage).

You are probably thinking…what is he talking about? I don’t waste any money. Yes, I used to think the same think the same thing, but I was dead wrong.  You will need to create a very honest and real budget yourself and make sure your expenditures do not exceed your funds.

- For a 3 month period keep a record of ALL expenditures. Yes that means every penny. You will find you spend a LOT more than you think. -At the end of each month total up what was needed and what was not. - Get rid of unnecessary  expenses!!! Here are some simple ideas to cut back on your variable expenses:

a) Bring your lunch with you (don’t eat out)

b) If you have a student credit card cancel all credit cards and/or transfer a high credit card balance to low interest cards

c) Reduce your long distance phone calls (use Skype)

d) Get a better cell plan

e) Cancel cable

f) Comparison shop (never buy the first thing you see…compare!)

g) Prepare and follow grocery lists (oh this is soooooo important)

h) Stop eating out and limit your visits to the local bar or pub.  (this is the biggest money waster for most people)

i) Shop for cheaper banking/ATM accounts

j) Drink more water instead of pop

k) Stop buying coffee out

l) View newspaper and magazine articles online or go to the library

m) Shop around for your textbooks and never buy them new.  You will literally save hundreds and hundreds of dollars doing this.

5.  Live At Home: Yes, I realize this is not always an option as not everyone lives close to a post-secondary institution.  However, if you can manage it you will save yourself thousands and thousands of dollars.  It may not always be the most attractive or appealing suggestion, but doing this for 4 years could conservatively save you over $50 thousand dollars!  That is a total that makes this option look more attractive.

6.  Ask Your Parents For Help: In most cases your parents will be more than willing to help you if they are able.  Every dollar they give you is one less dollar you will be adding to your debt load.  It will pay to have an open, honest and practical discussion with your parents.

7.  Finish Your Degree On Time: Sometimes for whatever reason students end up spending extra time in a set program and have to go back for a year or two to finish up.  Turning a 4 year program into a 6 year program will send you spiraling into massive debt.  Do whatever you can to avoid this trap.  If that means doing an online course in the summer to catch up, then this is something you should explore.

8.  Work Part Time During The School Year: This is a recommendation I give which comes with a condition.  You need to make sure that any employment does not interfere with the real reason you are there…to get a great education and maintain a very high GPA.  However, if you can do that and juggle employment at the same time, you will be helping a great deal in reducing your future debt.  This can be a key strategy.

There are many ways students can avoid or at least minimize their future debt.  Nobody wants to graduate from a program which they have been giving their all, only to find themselves in a bleak debt ridden situation.  It does call for willpower and sacrifices, but in reality it will only be for 4 years and is a classic example of a little pain for long term gain!  If you have any strategies you would like to share please hit the comment button and share away!

Sources:

The Student Debt Trap and How to Avoid it.  http://www.studentdebtinfo.co.uk/tips_on_avoiding_student_debt.php

10 Ways for Students to Make Money While in College or University.  http://www.edubabbling.com/10-ways-for-students-to-make-money-while-in-college-or-university/

How to Avoid Student Debt.  http://www.studentdebtrelief.us/knowledge-base/how-to-avoid-student-debt/

 

 

 

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