Top 10 strategies to avoid excess student loan debt

Student Loan debt is in the news, and on the minds of many Americans.  This month, The Federal Housing Administration, (FHA), added to the misery of student loan debt problems by making it more difficult for first-time homebuyers to make a down-payment which is required to establish a home loan.  Essentially, the FHA changes now require two percent of student loan debt to be calculated in an applicant’s debt-to-income, DTI, ratio.

Here are some things that can be done to avoid overwhelming student loan debt, before it becomes an issue.

#1           Remember, not all college degrees are created equal.  During High School, start researching degrees vs careers and ensure that what you’re considering to pursue in college will be a legitimate way to earn a decent living, provide enough income to support your desired lifestyle, and to pay off any student loans.

#2           Of course you want to encourage your kids to “follow their passion.”  However, some interests make better hobbies than careers!  Is college right for your child?  Weigh your options and choose the best case scenario.

#3           Apply for every student scholarship you can gets your hands on.  Get organized, and hit them hard. Hard work and dedication to this incentive will pay itself off…and then some.

#4           Encourage your college bound student to live at home while going to school.  Sure, the ‘college experience’ may be hampered by living at home, but the long-term benefits of saving “cost of living expenses,” are huge.  Pull together numbers and face the facts directly.

#5           Encourage part-time work during college.  There are many jobs offered right on campus in both public and private colleges.  Help them start a savings account and begin to build credit.  Although they may be living at home, they should still adhere to a college student’s budget and learn financial responsibility.

#6           BUT, don’t work so much that it extends an early graduation date.  The quicker you can obtain your college degree, the better!  Stay focused and informed.  Don’t take an entire summer off, try reducing credit hours instead.  Plan your classes in advance to see when the courses you need are available.  Talk to a guidance counselor at school.

#7           At minimum, try to pay upfront for books each semester.  Opt for online books instead of hard copies whenever possible.  Visit used book stores and look for ads from other students who are hoping to sell their used books.  Google the book needed and see if there are other alternative options that will save some cash.

#8           Try to take out loans for only what is absolutely needed.   Banks will often offer more, and that extra money can be tempting.  Don’t spend borrowed money, and if you can pay for any percentage of your classes upfront, do it.

#9           Ask your lender if you can earn a performance bonus,or performance credit based upon good grades.  If you qualify, be sure to place it right back into your student loan.  It’s not easy to do, but you’ll be happy you did.

#10         Students should choose online books instead of hard copies whenever possible.  Visit used book stores and look for ads from other students who are hoping to sell their used books.  Google the book needed and see if there are other alternative options that will save some cash.  Some professors and counselors may also be of assistance.

We all make mistakes, and sometimes, life just happens!  If you find yourself in financial trouble, just know that there is hope.  Contact a reputable local bankruptcy attorney who can discuss the possibility of a bankruptcy or non-bankruptcy options.

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