Praises rising from millennials across the world with the news that most recently broke. Although we now have to fight for our toilet paper, cancel our sunny vacays, and do everything in our power to not go completely stir crazy, the Corona Virus did bring about a ray of sunshine for millennials with college debt. No interest on federal student loans. You heard me. This is not a drill.
I went to a private college that had a fairly large price tag of $35,000 per year. No amount of educational scholarships could fully cover the cost. And as anyone that went to college knows, the FASFA made me out to be a millionaire, and I received no federal aid. With that being said, I was tasked with paying for my four years of private education on my own. I paid for about 80% of my education along the way, allowing me take out minimal loans. The loan that I did accrue was paid off in less than 6 months upon graduation.
There is no secret formula or money tree that allowed me to do this. This was years of hard work and determination to not be a part of the societal college graduate norm. To not be a part of the majority that graduates college with staggering debt, spends too many years paying on this amount, and doesn’t make nearly enough in the early years of one’s career to pay this amount down.
As I said before, there is no magic way to pay for college. Believe me, I wish there was. The only way to spend money is to make money. The following includes steps I took to become debt free within 6 months of graduation.
This message is for recent graduates or those enrolled in college. It can be done!
How to Reduce Student Loans from Accruing
1. School Choice
College is an interesting time in which 18 year olds are tasked with making a major life and financial decision. Parents and society have glamorized following one’s dreams, fully embracing the college “experience”, and attending specific elite schools. However, no one wants to discuss the financial burden that this school may place on a student upon graduation. Have these hard conversations, think through the impact that $40,000+ per year of debt may have on your life, and apply for a variety of schools in order to make a wise decision.
Yes, college is a time for growth, experiences, and receiving outstanding education. However, parents and students need to think through if they can have the “experience” at a school that makes more sense financially.
I got accepted into my dream school, but this school had a near $45,000 per year price tag due to the high cost of tuition and room/board. Financially, I knew that this did not make sense for me. I chose a different path and attended Grace College where I still received an outstanding education for less than ½ of the sticker price that my “dream school” possessed. (I made the most of attending here, and I found amazing friends, involved myself in many opportunities, and was able to receive a challenging education.)
Had I chosen the experience that I originally wanted and hadn’t considered the financial burden, I would have selected the more elite university and would have graduated with over $150,000 in debt.
2. Graduate Early
Check if your school has a program in which you can take extra courses throughout the school year and summer. Graduating in 3 years, rather than 4, will allow you to save on tuition, room and board, and will allow you to start your career earlier (resulting in making money sooner that can be used to pay down your loans).
I attended a school in which there were set programs that encouraged graduating in fewer years. They had a three year undergraduate program, as well as a four year program in which one could obtain both an undergraduate and master’s degree.
Completing the four year blended program allowed me to save nearly $50,000 had I chosen to get my MBA after graduation.
3. Apply for Educational Scholarships
If you are a part of an average, middle-class family, the government assumes your parents have tens of thousands of dollars to throw at your school bill. In my situation, this was NOT the case. Because of this, I received little to no financial aid from the government and none from my parents.
Apply for scholarships that are not based upon your financial status, rather upon your successes. Educational scholarships can be found through your local community foundation, online, or via your school’s financial aid office.
Yes, this will take you time. However, even being awarded one scholarship could provide you with a few thousand dollars that can be applied towards lowering your college bill.
4. Get a Job in College
Use your existing skills and school connections to find a job within your college’s community. Search for a position as a banker, an office assistant, or a government worker that provides you with professional experience, requires only a high school degree, and pays much better than many other openings.
College is a busy season of life, but I can guarantee that you have more free time than you think. Manage your time wisely, make sacrifices, and use this free time to earn some money. This will allow you to use this income to pay for college bills as you go, reducing your need for student loans.
I worked nearly 30 hours per week for four years throughout college at a local bank, as well as possessed an on campus job as a tutor/assistant. I was incredibly lucky to find a position that allowed me to work around my classes, as well as my on campus job allowed me to spend my evenings earning extra income. I was making over two times the amount of minimum wage at age 18 with only a high school degree.
You may have friends in school that view college as a time to only focus on school, who have an abundant amount of free time, and who then graduate college with a mountain of debt. Don’t let this be you. I graduated with honors, I worked multiple jobs, and I still made friends and had plenty of fun. Did I have free time, NO. However, I worked incredibly hard during this season of life and graduated school with little debt because of my dedication.
BONUS- Not only did working throughout college reduce my need for student loans, it allowed me to create great professional connections, build my resume while in college, as well as learn amazing life skills such as leadership, time management, and organization.
Working throughout college allowed me to pay for $60,000 of my $75,000 total school bill in CASH. $60,000 that was not a burden after graduation. $60,000 that earned no interest.
5. Work During the Summers
On top of working throughout the school year, I also worked full time every single summer through internships in order that I could save for the upcoming school bill.
Are there going to be students that use their summer to lounge at the pool every day, yes. Will their Instagram stories inflict insane jealousy, possibly. Will you thank yourself later when you graduate with little college debt, absolutely.
6. Monetize Your Skills
In addition to working, find a way to monetize a skill or hobby that you enjoy. This will allow you to use your free time doing something that you love, will allow you to build your professionals connections and resume, as well as earn some extra income.
Photography, car detailing, dog walking, blogging, or cleaning houses may be a great side hustle to help you pay for your schooling.
7. Create a Savings Plan
With all this extra income, it will be tempting to spend this money on new clothes, fun trips, or takeout dinners. Create a strict budget, stick with it, and keep your long term goals in mind.
Configure how much you need for the essentials, give yourself a little spending money, and put the rest into a savings account that you cannot easily access. When it comes time to pay for your semester of school, you will be amazed at how much you can pay out of pocket!
Track your spending and create a realistic budget based upon your needs.
How to Pay off Existing Loans
8. Live at Home
Okay, I love my parents, and I am extremely grateful that they allowed me to live with them during the first year after college, but I did not love moving back home upon graduation. However, my finances did love it.
Paying rent is one of the biggest expenditures within one’s budget. If your family is willing, and your ego can handle it, live with your family for one full year upon graduation and use this extra money you would have spent on rent to pay down the principal balance of any outstanding student loans you may have.
This is a great way to make the most of your income and get a head start on paying off loans.
9. Become Debt Educated
Create a plan around the debt that you did incur, and do some research on your specific type of loan and how you can best pay it off.
If you are able to pay extra on the loan each month, direct these funds towards paying off the principal balance of the loan. This will save you money in the long run due to less interest accruing and being paid.
Consider refinancing the loan if you are eligible for a better interest rate.
Make a plan, reduce your budget in other areas, and pay off your student loan debt. My order of focus was to first put aside 10% in a 401K, to then build a $5,000 emergency savings fund, and lastly to throw the rest of what I could afford at paying off my student loan debt of $12,000.
10. Create Budget
Once you are at the point that you are earning a consistent income, as well as have tracked your essential spending needs, create a strict budget.
Adhere to this budget that will force you to make sacrifices in order to pay off your student loan debt.
I am no financial guru, trust fund baby, or lottery ticket winner. I am an average 23 year old with a not so average view of money and approach on paying for college. I paid for $60,000 of my $75,000 college bill in cash while in college and paid off the remaining loan within 6 months of graduation. Put in the hard work, adhere to a budget, and pay off those student loans. You got this!
XOXO,
Abbey Rose
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