One of the biggest issues with the education system in the country and around the globe is student loan debt and the impact it has on households.
In today’s society, acquiring a College or University education has become somewhat of a prerequisite for most occupations. Unfortunately, this also means the majority of households are subject to the burden of student loan debts.
In fact, in the United States alone, 45 million households are impacted by student loan debt, forcing them to find ways of navigating their financial life while managing their debt through a good portion of their working careers.
The impact student debt has on households is quite significant. This results in the majority of these households finding themselves in challenging financial situations. Because of this, finding ways to manage student loan debts needs to be prioritized.
Below are five ways that will help you manage and prioritize future and existing student debt during your college education.
1. Preparing in advance
One of the best things you can do before you even agree to accept any amount of student loans is to prepare your finances ahead of time. It’s also an extremely difficult thing to do for most people, for many reasons.
Doing this would require you to prepare at a relatively early age in life when you’re seventeen or eighteen. Not only are you young, but there’s also a good chance you have limited financial resources, skills, and the knowledge available to you to prepare in full for the future expenses of a college education.
Now, that’s not to say that it is impossible. Because it isn’t – the odds are just against you.
The earlier you can start to prepare for the incredibly high costs of tuition and other education-related expenses, the better off you’ll be. While it might be difficult to make a significant dent in the overall cost of tuition, focus on some of the other expenses so that you aren’t finding yourself stressed or demotivated about the financial expenses. For example, rather than focusing on saving up for your tuition, you can financially prepare yourself by instead saving for the estimated costs of your books and other school supplies that you anticipate needing. This will put you in a much better position than most of your peers, and you’ll be thankful you did when the time comes to purchasing school supplies.
Making small sacrifices and saving small increments along the way is a smart money move you can start making today to set yourself up for a better financial outcome in the near future. By doing this, you’ll also start to shape good financial habits that you’ll have with you for the rest of your life.
2. Investing your assets and capital over time
Thanks to the power of compound interest, investing your assets over time can prove to be incredibly beneficial and profitable. This is not new, and it’s likely something you’ve already heard many times before.
So how exactly does this relate to preparing for and managing student debt? Well, the answer is actually quite simple.
It’s important to recognize the benefits of investing early in life to take advantage of compounding interest. The sooner you can start investing and the more time you give your money to grow, the more of it you will have. That being said, even during your college years, it is critical to both your short-term and long-term financial success to look for opportunities where you can start investing. By doing so, you’ll ensure that you have sufficient amounts of money to pay off your debts when and if needed. Alternatively, it means you will be ahead of the game and will have gotten a good head start at saving and investing for your retirement.
Even if you do not get an opportunity to invest during your college years, it’s important to make sure that you are focused on saving (investing) your money consistently.
3. Finding an affordable college
With the significant rise of tuition costs, notably from larger more reputable colleges and universities, millions of students are looking for more affordable options when it comes to acquiring a post-secondary education.
It’s important here not to strictly make your decision based on tuition costs alone. Remember, you are going to college first and foremost to get an education. The last thing you want to do is jeopardize the quality of your education (and the opportunities that come from attending particular schools) because of cost alone.
Instead, examine your options more carefully across the board with keeping costs in mind. Going to a college or university that’s more affordable, yet preserves the quality of their education and post-college opportunities through networks, can be an extremely effective way for you to minimize tuition costs and lower your overall debt burden.
Remember, taking on student loan debt is a long-term commitment. The larger the hole you dig, the more it takes you to fill it up and the longer it takes to get out of it.
4. Finding ways to earn an income through school
Finding a way to earn an income, even part-time, during your college career can be incredibly valuable in terms of acquiring skills and meeting new people. It’s also an effective way to earn an income that you can use to help combat your current (or future) student debt.
Whether you’re considering a hobby, side hustle, part-time employment, or even starting your own business, earning any sort of income during this stage of your life is a good move.
The income that you’re earning can be used in a few different ways. It can be used specifically as a dedicated fund for your entertainment and off-campus related expenses. You can save and reinvest the money to start taking advantage of compound interest. You can use this money for everyday expenses, including additional school-related expenses, as a way to avoid taking on any additional student loans. And lastly, you can use this earned income to start making early payments towards the principal on your existing student loan.
Either way, you will have options and will be in a much better position financially.
5. Finding ways to reduce the cost of other expenses
This one is a game-changer for your finances. It’s also something that not enough students take advantage of or even consider in the first place.
In addition to tuition and rent, there are plenty of additional expenses you need to pay for that can cost you anywhere from a few hundred to a few thousand every year while in school. This includes things such as textbooks, equipment, supplies, clothing, and food and entertainment costs.
For any school-related supplies such as textbooks, supplies, and any classroom equipment that’s required, do your research. First, find out if these supplies and items are in fact required and will be used throughout the year. If not, then you may be able to avoid them altogether. However, if they are required, do your research to find quality pre-owned supplies and books rather than spending an unnecessary amount on new items that you might only need for one year.
For clothes, food, and entertainment costs, look to see what options you have as a student and whether or not that provides you with ways to acquire additional discounts or sales. Chances are that there will be a lot of options available to students, but it may require some research, time, and effort to find them. In the end, every dollar counts, and anywhere you can save yourself additional costs can be considered a win.
Moving forward to combating the student debt burden
It’s no secret that student loan debt has become one of the largest issues across the country, impacting 45 million households. With the inflated costs of living, combined with the increasing costs of tuition, navigating student loan debt is something that deserves more attention and needs to be a financial priority for everyone.
Luckily, there are several ways to manage and combat student loan debts to decrease the impact of the burden. Regardless of the program you’re in (especially if you’re learning how to become a financial analyst), having a good understanding of compound interest and effective money management principles can help you prepare, manage, and control your reliance on student debt.
Your financial future starts today
Savology has helped more than 40,000 households across the United States improve their financial well-being by providing comprehensive digital financial planning. Users can get started with our free financial planning or premium monthly planning memberships, allowing them to build a personalized financial plan, holistic report card, personalized action items, and more. In addition to our consumer-facing platform, we’re helping employers across the country provide their employees with effective financial wellness benefits.