It is no secret that student loan debt is crippling the foundation of the US economy1. What once was the crown jewel of achievement, is now a tremendous financial burden affecting millions of Americans at various income levels. Over 14 million students are in student loan debt and if you sum the total student loan debt in the U.S, it totals over $1 trillion2.
But what about the promise of a better life after college? In high school, going to college is considered to be one of the only ways to make a meaningful income in life; college is positioned as a necessity, not a choice. With this narrative penetrating into the hearts and minds of young adults, it forces their hand to begin a new cycle of hardship, unpaid debts and declining U.S. incomes. For instance, a college graduate in 2016 earned 10% less on average than a student in who graduated in 20013. Nearly 15 years have passed and wages for college graduates is somehow declining, and with the threat of inflated health care costs looming over our nation like a perched vulture, it is a more stressful time than ever to be a collegiate grad. Going to college is looking a lot less like an investment and a lot more like a headache.
However, just like the laws of taxation, minimizing student loan debt is dependent on your knowledge; understanding what you can and cannot do/ as well as having a solid understanding of services that are provided to you. However, one of the most important factors is choosing a University that affords you a high level education at a value driven cost. As a student, here are a few ways to minimize student loan debt to ensure you attain the future you want, at a cost that gives you the greatest amount of flexibility long-term.
1. Enroll in FAFSA
FAFSA stands for “Free Application for Federal Student Aid”. To put simply, FAFSA is an annual form students can complete to determine their eligibility of receiving grants and scholarships, based on income levels. Even if you come from a high-income household, that doesn’t mean you shouldn’t apply. Every year, over $2.7 billion in free FAFSA money goes unclaimed, meaning millions of American students simply don’t apply for FAFSA4. As great as FAFSA sounds, there is one quick watch out to be aware of. FAFSA pre-qualifies you for student loans, so you’ll want to understand the distinction between “free money” and “IOU money”. If FAFSA offers you a “grant” or “scholarship”, that’s free money. If FAFSA offers you a “loan”, that’s “IOU money” meaning you’ll have to pay it back with an interest rate attached. For more information on student loan myths, check out this awesome article written by U.S. News.
Also, when you’re ready to apply, remember visit https://fafsa.ed.gov/.
2. Apply for scholarships (Especially at your University)
Scholarships are financial aid rewards with the goal of assisting you in paying for higher education. Sometimes, scholarships are awarded from Fortune 500 companies for submitting an essay, or conducting an extra-curricular project. However, what is somewhat understated are the scholarships that are dispersed from the Universities themselves. Many Universities have scholarship sections of their websites that provide a list of scholarships for you to apply for, with some requiring an essay submission or a simple application. Make sure to ask your University counselor where scholarships are posted on your University’s website and start applying. For more scholarships, check out this awesome website which provides a list of great scholarships depending on your location: https://bigfuture.collegeboard.org/scholarship-search#.
3. Choose your University as a consumer product
This is a tip I wished I knew before I started college. Many times, we as students are sold on a promise; the promise that this school is better than that school because of reasons X,Y,Z. Or this school is better than that school because of the strength of the name identity alone. As a potential collegiate student, pay less attention to the “name brand” and pay more attention to the “value” of the education. Factoring in the strength of the program with the cost associated with it. Remember that it matters more to a job recruiter what you did during your tenure in college, not what college you came from. Experience is the name of the game when it comes to getting a job after graduation.
The above tips may not eliminate your student loan debt, but it should certainly help you in making informed decisions about your financial future. Remember to always stay informed, and #BuildyourNest. Pave the way for your financial future, to end in prosperity, not despair.