Monday, 16 July 2012

8 Ways to Avoid Taking Out Student Loans

8 Ways to Avoid Taking Out Student Loans

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Student loans might be your saving grace in college, but they will definitely become your biggest headache after you graduate. U.S. student-loan debt has reached a record-high of $1 trillion. If that statistic isn’t enough to make your stomach turn, maybe knowing that the average student racks up $25,000 in college debt will. Managing your student loan debt is important, but avoiding it altogether is even better. Check out these eight ways to avoid taking out student loans.
  1. Get a scholarship:

    A great way to fund your college education without accruing debt is to apply for as many scholarships as possible. Contrary to popular belief, you don’t have to be a genius or star athlete to be eligible for a scholarship. There are a wide variety of scholarships available to students of all different backgrounds and skills sets. If you have something unique to bring to the table and are willing to put in the work to research and apply for a scholarship, you may just end up a couple thousands of dollars richer.
  2. Work:

    Working while in college is not easy to do, but it can help you avoid taking out loans. Depending on where and how often you work, you can put your entire paycheck toward paying tuition and living costs. The challenge here is balancing school and work without letting your grades slip. Always stay on top of your studies because bad grades are a waste of your money.
  3. Get help from your family:

    One of the best ways to avoid taking out student loans is to have your family members help you out. It is far safer to borrow from your parents or relatives than from the government or a private lender. Who knows — maybe your family members will give you a 0% interest rate or not charge you at all.
  4. Save up:

    Saving up for college will take some time and discipline on your part, but it can be done. Reuters Money recommends setting a realistic savings goal and sticking to it. This may require working an extra shift, selling your stuff, or taking on a second job, but you’ll be glad you did later. Do not borrow from your college savings fund. You may also want to talk to your parents about opening an education-specific investment account or considering a qualified tuition program.
  5. Attend community college first:

    Going to the same college for four straight years is an expensive endeavor many students cannot afford to do. But that’s no reason not to go to college or transfer to a four-year school later on. In fact, one of the smartest things cash-strapped college students can do is attend community college before transferring to the school where they will earn their degree. You can knock out a nice chunk of your credits in one or two years and save a ton of money by attending a community college.
  6. Find an education sponsor:

    Another good way to avoid taking out student loans is to find someone to sponsor your education. This person can be a family member, a family friend, an employer, a community leader, or anyone who is willing to invest in your education. This will take a great deal of work and persuasion on your part, but if you can secure a sponsor, even if just for a year, you will be able to save a lot.
  7. Live frugally:

    College students don’t need much, nor do they have much money to spend. One of the easiest ways to save money and avoid taking out unnecessary student loans is to live frugally. In addition to eating PB&Js and Ramen every day, you should also try to live cheaply and spend as little as possible. Borrow furniture and take as many hand-me-downs as you can.
  8. Ask your parents to take out parent student loans:

    One way to get around taking out student loans for yourself is to ask your parents to do it instead. In order to receive a parent college loan, such as a PLUS Loan, you and your parents must meet certain eligibility requirements. Be sure to do a thorough amount of research on these loans and talk to your parents well in advance to see if this is a viable option for you.

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