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7 Tips For Taking Out Student Loans Right

7 Tips For Taking Out Student Loans Right

One of the hot debates in recent years has been over the true value of a college degree. It still remains the most viable way to have a good career with decent compensation, but the rising cost of college tuition has put the cost–benefit question to the forefront.

Students these days are leaving college with a mountain of debt. Student debt is now estimated at over one trillion dollars. Graduates are also heading into a tough job market to boot. Paying back student loans can be easier with some forward thinking. Here are seven tips to keep your student debt manageable:

1. Keep Debt No More Than Your First Job’s Salary

A good rule of thumb when you take out student loans is to have the total amount of debt not exceed your first year’s salary when you get into the workforce. When you decide what to major in you can develop a good idea of what a starting salary will be. Whatever you rack up in college debt should not exceed this.

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Students will eventually be working in the real world. Things like rent, car payments, food and utilities will need to be figured out as part of monthly budgets. College debt will be part of that budget. Having a debt payment you can afford will be essential in your future.

2. Choose Federal Loans Over Private Loans

Federal student loans traditionally have better rates than private ones. The loans are subsidized by the federal  government. Private loans are provided by banks, credit unions and lending institutions. Federal loans have advantages that can help with repayment.

Federal loans allow a grace period of repayment after you graduate. Private loans may not offer this. Federal loans also offer deferments if you are faced with situations that affect your ability to pay. Options like these are at the discretion of individual private lenders.

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3. Choose a Career in Public Service

Some positions in public service have incentives that assist in making student loans easier to deal with. Occupations like teachers, fire fighters, and law enforcement can be subject to these options. One example is the Public Service Loan Forgiveness Program, made effective October 1, 2007. If you make 120 full, on-time, monthly payments to your student loan while working full time in the public service, the balance of your loan will not need to be paid.

4. Go to Community College

Many local community colleges are able to provide quality education at a lower price than private schools. This is another thing to think about when taking out student loans. If you plan on getting a four-year degree, think about going to community college for the first two years. Look at the criteria of transferring to a four-year school before enrolling.

5. Plan Your Course Load

One thing to plan for when taking out student loans is your course load. What will be your status, full time or part time? If part time, you may not be eligible for full or even only partial financial aid. If you work and go to college part time, you may be responsible for more out-of-pocket education costs than a full-time student.

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Know what courses you will be taking and when. Many majors have a course sequence where select courses are only offered in the spring or fall semesters. Make sure your course load is on track with anticipated completion dates so there are no outstanding courses you need to take to finish your program.

6. Cut Costs

For young students starting out, graduating and going into the world of work may seem far off. It’s something they may not give much thought to with college requirements taking up their present mindset. Thinking about student loans that have to be paid after completion of college doesn’t seem like a priority.

College costs are an obligation that must be repaid. It’s only after graduation that the true realization of this may hit. To minimize the size of your debt and the possible shock associated with it, cut costs during your academic career. If you are able to minimize the need for student loans it will serve you well in the future.

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7. Find Work That Works

One of the ways students have found to lessen the need for taking out large student loans is to find work. This can range from regular paid jobs to work-study programs with the school. Money made can help with expenses and even go toward tuition.

Working can be great but find something that works with your schooling. Get something that has flexible hours around class to help with scheduling for class and life. Find employers that have access to cost-effective transport.

College is still arguably the best option for securing and maintaining a successful career. But taking out student loans the smart way can help in the years ahead.

Featured photo credit: Simon Cunningham via lendingmemo.com

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Last Updated on January 21, 2020

How to Develop a Millionaire Mindset in 6 Simple Steps

How to Develop a Millionaire Mindset in 6 Simple Steps

We all like to dream about being financially wealthy. For most people though, it remains a dream and nothing more. Why is that?

It’s because most people don’t set their mind to achieving that goal. They might not be happy in their current situation but they’re comfortable – and comfort is one of the biggest enemies of growth.

How do you go about developing that millionaire mindset? By following these simple steps:

1. Focus On What You Want – And Take It!

So many people are too timid to admit they want something and go for it. When there is something that you want to accomplish don’t think “I could never actually do that”, think “I could do that and I WILL do that”.

Millionaires play to win, not to avoid defeat.

This doesn’t mean to have to become a selfish jerk. What it means is becoming more assertive and honest with yourself. You don’t have to grab off other people. There is a big pot of unclaimed gold in the middle of the table — why shouldn’t you be the one to claim it? You deserve it!

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2. Become Goal-Orientated

It’s almost impossible to achieve anything if you don’t set firm goals. Only lottery winners become millionaires overnight. By setting yourself attainable goals, you will get there eventually. Don’t try to get rich quickly — get rich slowly.

Let’s take the idea of making your first million dollars and expand on what kind of goals you might set to get there. Let’s also say you’re starting at a break-even position – you’re making enough to get by with a few luxuries, but nothing more.

Your goal for the first year can be having $10,000 in the bank within a year. It won’t be easy but it is doable. Next, you need to figure out the steps you need to take to achieve that goal.

Always look at ways to make growth before cutbacks. With that in mind, you might want to see if you can negotiate a pay rise with your boss, or if there’s another job out there that will pay better. You might be comfortable in your old job but remember, comfort stunts growth.

You may also have other skills outside of your workplace that you can monetize to boost your bank balance. Maybe you can design websites for people, at a fee of course, or make alterations to clothes.

If this is still not enough to make the money you need to save $10,000 in a year, then it’s time to look at cutbacks. Do you have a bunch of old junk that someone else might love? Sell it! Do you really need to spend $10 on your lunch everyday when you could make your own for a fraction of the cost?

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If you are to become a millionaire, you need to start accumulating money.

Here’re some tips to help you: How to Become Goal Oriented and Achieve More in Life

3. Don’t Spend Your Money – Invest It

The reason you need to accumulate money is for step three. Millionaires tend to be frugal people, and that’s because they know the true value of money is in investing. Being your own boss goes hand-in-hand with becoming a millionaire. You’ll want to quit your regular job at some point.

Stop working for your money and make your money work for you.

Rather than buying yourself a new iPad, that $500 could be used to invest in the stock market. Find the right shares (more on that later), and that money could easily double within a year.

There’s not just the stock market — there’s also property, and your own education.

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4. Never Stop Learning

The best thing you can invest in is yourself.

Once most people leave the education system, they think their learning days are over. Well theirs might be, but yours shouldn’t be. Successful people continually learn and adapt.

Billionaire Warren Buffet estimates that he read at least 100 books on investing before he turned twenty. Most people never read another book after they’ve left school. Who would you rather be?

Learn everything you can about how economics works, how the stocks markets work, how they trend.

Learn new skills. If you have an interest in it, learn everything you can about it. You’d be surprised at how often, seemingly useless skills, can become extremely useful in the right situation.

Start developing the habit of learning continuously: How to Create a Habit of Continuous Learning for a Better You

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5. Think Big

While I advise to start off with small goals, you absolutely should have a big goal in mind. If you have a business idea, then that is your ultimate goal – to start that business and make a success of it. If you want to invest your way to millions of dollars and do little work other than research, then that is your big goal.

There is no shame in not achieving a big goal. If you run a business and aim to make $1 million profit in a year and “only” make $200,000, then you’re still significantly ahead of most people.

Aim for the stars, if you fail you’ll still be over the moon.

6. Enjoy the Attention

To be successful, you have to be willing to promote yourself and enjoy the attention to a certain extent. Now the attention doesn’t need to be on yourself, it could be on your brand, but attention definitely attracts money.

Never be embarrassed to get your name out there. That means finding a spotlight and being brave enough to step right up underneath it.

If you run a business, try contacting the local papers. You’d be surprised at how amenable they often are to running a story about you and your business, and it’s all free publicity.

Above all, remember: You control your own destiny. Push hard enough for anything and you’ll get it.

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Featured photo credit: Austin Distel via unsplash.com

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