3 Creative Ideas for Avoiding the Student Debt Trap


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With recent college graduates shouldering an average of $33,000 in student debt, it's no wonder a new Gallup Poll found a correlation between heavy debt and a decreased sense of overall well-being.

Yet college students and their families continue to rack up levels of debt that were unheard of in the past, simply because they feel it necessary in order to procure that all-important college degree.

A college diploma is extremely important, of course – but you need not incur debilitating loan debt in order to reach your educational goals. Here are three often-overlooked methods of controlling college debt that can help make college more affordable, enabling you and your family to cut back on borrowing costs.

Explore all funding opportunities
With loans getting so much attention lately, it's easy to forget that there are other sources of funding for college – some of which doesn't need to be paid back.

Scholarships and grants are usually considered "free" money, and awards vary. Often, students need to qualify by being in a particular demographic group, or by having a high level of academic achievement. Others are granted based on financial need.

The U.S. Department of Education has an excellent portal through which you may search for awards by state. Several states offer a hefty amount of grant money to those who qualify.

For example, New York State's Tuition Assistance Program gives up to $5,165 per year to qualifying students, as long as they attend a list of state-based schools. California offers Cal Grants, which pay for a wide array of costs at state colleges and universities, including living expenses. Massachusetts has many programs, one of which will pitch in $6,500 per year for qualifying students to attend the University of Massachusetts. The state also offers interest-free college loans, which graduates have up to 10 years to repay.

Take what you need and leave the rest
If you do borrow, be judicious. Just because you are eligible to borrow thousands of dollars each year to pay tuition and fees doesn't mean that you have to sign up for every penny. Know ahead of time what your needs will be, and borrow appropriately.

While this may sound intuitive, it really isn't. Students often do not keep track of how much they are borrowing, which led the Indiana University system to bring this matter to the attention of its students – with gratifying results. Once borrowers faced the full impact of their student debt, loan disbursements fell by 11%.

Get a job
Many students today apparently do not work while in college, as evidenced by the unemployment rate of 11.3% for those aged 20 to 24, years when many young people are attending post-secondary schools.

Part-time jobs available to college students likely don't pay a great deal, but scoring a few hours per week of work can be a real boon to your bottom line. Even an extra $100 weekly per semester can really help with college-related expenses.

For those who worry that working will interfere with studying, a recent report shows that work-study, the federal program that subsidizes jobs that are correlated to your major can actually be beneficial to students that participate in the program. Another benefit of work-study is that you have a good chance of obtaining a job right on campus.

Keep in mind that you will need to fill out the federal Free Application for Federal Student Aid before applying for any form of financial aid, and that you probably won't qualify for every alternate-funding program you apply to. Taking the time each year to explore your options, however, may very well net you some of the help you need – in addition to a much lower college-debt profile come graduation day.

Get creative with this little-known tax "loophole"
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