Student loans are a significant financial issue for Americans. For example, the Federal Reserve estimated Americans owed $1.73 trillion in student debt in the second quarter of last year.
Large student loan payments can make it difficult to pay your bills and establish financial independence once you’re a college graduate. And excessive debt balances might mean you’ll be paying down your loans for decades.
But if you’re still enrolled in school, you can work on reducing your debt now, so you owe less when you graduate. Here’s how to help shrink your student loan balance while you’re still enrolled in school.
1. Attend Affordable Schools
Community colleges are generally much cheaper than four-year universities. Even if you eventually want a four-year diploma, you can start your education at community college to get your general credits or get a jumpstart on your major. When you’re ready to attend a four-year university, transfer your credits to your new school. Just make sure you understand what credits are transferable, so you’re taking the right courses.
In the same vein, public universities are government-funded and are usually more affordable than private schools. You also can likely get a tuition discount if you attend an in-state school. Remember to compare costs between public and private and in-state or out-of-state schools before committing to a college.
2. Seek Out Scholarships and Grants
Every year, around $46 billion in scholarships and grants are awarded by the U.S. Department of Education, colleges and universities and other private and public sources. Scholarships and grants can help you pay for your education with free money that you don’t have to pay back.
How to qualify for specific awards depends on the eligibility requirements, including economic need and other factors. You can look for awards online on sites like Scholarships.com and check for scholarships and grants provided by your state, county and the local community.
Make sure to look for scholarships offered directly by your school. Every college has its programs, and some may be targeted directly toward you.
3. Start Paying Loans Back Now
When your student loans are disbursed to your school, any overage amount is paid directly to you. It may be tempting to keep that money, but if you don’t need it, you should pay it back toward your student loan balance. Remember, you have to pay back any money you keep later, with interest.
In addition, you don’t have to wait until after you graduate to pay down your loans. Even if you can only pay a little extra occasionally, making payments now can lower your loan balance and reduce the interest you pay in the long run. This is where having income from a part-time job, or budgeting for regular student loan payments, can come in handy.
4. Graduate Early
There are many ways to reduce the amount of time you’re in school. You can take extra classes each semester, take summer classes or apply AP high school credits toward your college education. Avoid taking too many courses that don’t count toward your major or general education requirements, as those courses may end up extending the amount of time you’re in school. The less time you spend in school, the less additional debt you can take to pay for things like room and board, living costs and other expenses.
5. Employer Tuition Assistance
Some employers, including public and private organizations, offer tuition assistance or education reimbursements. Check with your employer to see what programs they provide to help you reduce your tuition. Even if they don’t offer any official tuition programs, you may be able to convince them to help pay for your school if the degree you’re pursuing is directly related to your career.