The lifelong value of receiving a college education is invaluable - but it does come at a cost. Students today know that their degrees can propel them to a life of great professional fulfillment and success. But many have to make incredible sacrifices in order to get there. Every year the cost of tuition across state and private institutions rises. Over the past five years the average total cost of a secondary education has risen 10%. And as college price tags grow, so does the debt that students incur. The average class of 2016 graduate left school with a student loan debt of $37,172. For many, this is a crippling way to begin a professional career. For some, who must fulfill postgraduate degrees, this starting debt puts them in an even more financially stressful situation.
While you can’t control the cost of your college’s price tag, there are steps you can take to put yourself in a better situation to manage student loans and mitigate debt.
Get a Part-Time Job
Yes, your primary focus as a student should be on your course load. However, even with a full schedule, you likely still have some free time to earn some extra cash. Take advantage of on-campus work-study programs, or local restaurants and stores to help offset some of your living expenses. Most universities offer free room and board to a Resident Assistant, which can slash over $10,000 from your yearly education bill. Do you have a car? Why not sign up to be an Uber or Lyft driver. The hours are flexible and you could make up to $23 per hour. Not only will having a bit of income help cover the cost of books and social extracurriculars, but it can also help you pad your savings account so that you have at least something to draw from after graduation.
Build Credit Early
Many students and young professionals fear credit debt. The common thought is to delay opening a credit account when you are financially strapped, because then you’ll avoid making any extra credit payments. But you need credit and you have to start somewhere. If you’re hoping to someday buy a car or take out a mortgage on a home, you’ll need good credit to your name. The key to building a good credit score is paying your bills on time. If you’re worried about responsibly managing all of your payments, lean on money organizing apps like Mint to help you stay on time and on task.
Take Advantage of Scholarship Opportunities
There are countless scholarship opportunities available to every student - you just have to look for them. Not only does your school likely offer an abundance of scholarships, but you can also look for nonprofits and corporations with student giving programs. Fastweb makes it easy to search for potential scholarship opportunities related to your college, field of study, or background. Although scholarships require applications and personal statements, these time investments are well worth your potential educational savings.
Prepay Loans
After you graduate student loan payments won’t kick in for six months. Most young professionals rejoice at the fact that they have some built in time to enjoy earning an income before they have to siphon a large portion of it to paying off their loans. The smarter choice, however, is to start paying as soon as you can. Even if it’s just $50 or $100 a month, the earlier you can make payments, the better position you will be in.
Plan for The Worst
While it’s important to remain personally optimistic about your career, it’s also necessary to give yourself a reality check. The truth of the matter is that the job market is fickle, and there may come a time early on in your career when you’re faced with unemployment or a difficult financial situation. Educating yourself about insurance policies, including life insurance, can help you navigate potentially tricky times without bottoming out. There’s a lot of misconceptions surrounding life insurance, namely, that it’s for people with families who need to plan for end-of-life finances. But life insurance policies also help professionals, who fall on hard times, bounce back; they provide a sound safety net for life’s unexpected curveballs.
Refinance and Consolidate
Unfortunately, some young professionals are saddled with private and federal student loans that have sky high interest rates. If you find yourself in this situation, you have the power to refinance your loans. Refinancing programs give you the opportunity to repay your loans with different terms and better interest rates. You also have the option of consolidating your federal and private loans so that you only have to pay one interest, rather than two.
Most professionals will attest that debt and loan payments are standard aspects of adulthood. While it would be nice to graduate debt-free, that is not the reality for most students. By creating a plan and educating yourself about your financial options, you'll be able to better navigate your early professional financial status.