5 Ways to Graduate with Less Debt

Until you have graduated and landed that dream career that you went to college for, your schooling costs may end up causing more debt than you had planned. To decrease those possibilities, come up with a solution that will help you graduate with less debt.

Graduate in Less than Five Years

College tuition can be costly enough without tacking on extra years of study. Unless your major requires it, try to graduate from college in less than five years. This will be great for your budget, as it can save some of the college debt that may pile up. It also gets you into the workforce faster.

The Higher Education Research Institute of UCLA found that just 28 percent of public university students are able to graduate in four years. Carefully plan your course schedules with the goal of graduating in four years clearly in mind to avoid paying for five years (or more) of classes like most students.

Get Real with Money: Use Existing Budget, Not a Future One

It may make sense to go ahead and plan where future money will be spent and, yes, that should be done to a certain extent. However, you must also get real about your money if you plan to budget and graduate with less debt. If you are barely making enough to pay monthly expenses, don’t go buy a new car or add on any more monthly payments. Figure out your living budget according to the resources you have on hand, not those you plan to have on hand in the future.

Once you have worked out your budget according to your current finances, stick to it. It might be tempting to go out with friends or buy new clothes, but such impulse decisions will only put you in more debt. Try to make some room for “fun” expenses like these in your budget, but be realistic about what you can afford.

Plan a Budget for Your Future Salary

Many go into debt due to planning failure or lack of budget planning. To graduate with less debt, you must plan ahead. Do you know what type of salary you will potentially make starting out in your career of choice? Figure out your future salary and plan a budget that you can live by once that happens. Use online resources like Salary.com to calculate your likely salary after graduation in your desired job. This can help save time and reduce debt in the future.

Debit First

One way you can help yourself graduate with less debt is to always use cash or debit first. Credit should be used sparingly. Add some credit card debt to student loans and your debt just may get unbearable. It’s always best to use available resources before borrowed ones.

After Feb. 22, 2010, new credit card laws go into effect: college students won’t be able to get a credit card without a co-signer, such as a parent, guardian or spouse, unless they can prove that they have the finances to pay off any accumulated debt. Such restrictions are intended to help college students graduate without credit card debt on top of student loans.

When Maxing Out Loans, Use Federal Funds First

When attempting to graduate college with less debt, loans are high on the list. Federal loans are generally the way to go for the best rates. Fixed interest rates and more comfortable repayment options are some of the perks. Private loans often charge high interest rates that may even continue to increase periodically.

Be careful when taking out student loans — it’s easy to confuse private loans with federal loans. You don’t want to finish school only to learn that you have more to pay off than you thought due to the higher interest rates that often come with private loans.

Lyn Lomasi