Minimizing College Loans
Minimizing college loans means thinking differently. Be sure you have exhausted all sources of free money. Be sure to view my free webinar. The strategies I cover will have by far the biggest help in reaching your goal of
minimizing college loans.
The author Steven Covey had a principle to live by "Begin with the End in Mind". Let's follow that proven approach to help guide you in your critical college loans decision.
- Know Your Golden Goose. Since your future job is the most likely source of how you are going to repay the education loan it is wise to scout our your future earning prospects. Simply find the average starting salary of the entry level position you are seeking upon graduation.
- Set your Debt Ceiling. The biggest favor you can do to help minimizing college loans is to keep a maximum of 8% of your starting salary be devoted to the repayment of principal and interest over a 10 year period. While it is frequently tempting to rationalize going beyond your limit remember the following:
Love and Money. It is not uncommon for today's young couples, both burdened by college loans to begin life together with six figures of college indebtedness. On your first date you may want to ask how they are paying for their college education before you consider a second date! It may not sound too romantic but it's a sure way to minimize college loans you'll have to help pay back some day all too soon.
- Consider the difficulty and length of time it may take to find a job in your field. The future employment outlook cannot be predicted with confidence when you are ready for full-time work. Today's college graduates are among the highest category of the unemployed. You may need to take a much lower paid position first. Don't be discouraged just be realistic in your employment outlook.
- Every dollar that you exceed over your maximum ceiling now multiplies many times over in the future. Many college graduates who did not give much thought to minimizing college loans experience limited lifestyle choices. Where they can live, the kind of car they drive and being able to go out to dinner with their friends are directly impacted.
- Parents and other adults who may promise to help you repay are subject to the same uncertain economy that you are and may not be able to follow-through when the time comes. Take personal responsibility in minimizing college loans. Always keep in mind that you are on the hook legally to repay your education loans. If a family member is generous to help you repay them consider it the gift it may become but don't expect it.
Know Your Numbers Know what your payments will be and your total cost of college with interest. Here is a very useful
student loan calculator
to not only estimate your loan payment but what income you will need after graduation. Be very aware of the slippery slope. I have met families with all levels of income who began the borrowing process not realizing the cumulative loan balance run-up due to high college costs, annual above inflation increases and minimal savings.
Parents often rationalize this choice by counting on a higher income or bonus to help erase the student loan on behalf of the student. In today's economy one or both spouse may often experience an economic pothole with the loss of overtime or job. The family financial wheels soon come off and the student is left with a high level of college loans to repay.
Once a student finds out how easy it is to get an education loan it is by far the least painful choice in the short term and almost habit forming. Of course the reality and shock grows as graduation draws closer. The real pain then begins for a decade or more of high repayment levels.
“The most powerful force in the universe is compound interest.” Albert Einstein
On top of already high college costs students are typically paying 50% to 200% or more back on their total cost (with interest) of loans! Here are the most influential ways to keep more money in your pocket and less out of your lending institution.
- Borrow ONLY the money you need for direct college expenses such as tuition, room and board less your savings and any scholarships awarded. Use your part time income for books and personal expenses. Have the loan check be payable directly to the school to avoid the temptation of using the money elsewhere.
Shockingly only 52% of college loans are actually used for direct college expenses!
- Find the lowest interest rate possible.
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- Minimize deferments. Unless you have a subsidized loan the principal keeps growing the longer you defer and increases the pain of repayment. Even paying interest only while you are in school is another way toward your goal of minimizing college loans.
- Pay additional principal . As soon as you have any income that can begin to repay Einstein's quote above can work in your favor. Paying off your highest interest rate loans first and paying extra on them each month is a much faster way to reduce your student loans.
Identify one weekly item to eliminate from your budget - driving a less expensive car, Starbucks, movies or eating out - and shift that to fund your extra payment.
I often encounter students who have almost given up hope with the mountain of education loans they have accumulated. Take heart! Because of the powerful effect of the run-up of interest costs attacking principal faster than your repayment schedule says is a very effective way of minimizing college loans.
- Stay aggressive. Did you pay off your first highest interest loan? Celebrate! Then take the same payment you have been making PLUS your extra payment on principal and attack the next highest interest loan. You will be amazed how fast your repayment schedule will accelerate you toward your goal of being college debt free!
Accelerated Debt Pay-off
Got debt you want to get rid of much faster? Whether you are a parent or a student/recent graduate with an income you will want to find out more how to pay-off your debts in less than half the normal time.
Because of all the forms of debt college drives I was so relieved to find such a valuable help I developed a whole new service around it!
Be sure to see your own
how you can get rid of debt much faster without a change to your present lifestyle.
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What Clients Are Saying
| “…without your involvement, we never would have thought to approach the college directly…. We got the documentation together to obtain residency, created letters to send and were granted residency which translated to $20,000 in savings. |
THEN we went back and said, 'don’t take away her out-of-state scholarship just because she is now a resident' and got OSU to maintain the $7,000 scholarship".
| "We would like to express our appreciation for the service that our daughter received.|
She is our first child to go through the college application process, and it was very intimidating for our whole family. You were able to create a clear, understandable path for our daughter.
As a result of all of this hard work, our daughter was offered three presidential scholarships at various colleges, including a full tuition scholarship to a private college.
Thanks again, and we look forward to working with you on our son's upcoming college search."
|"HWS presented an above average financial aid award, however, it included some work study. With your guidance, I went back and asked that the work study be converted to either grant or scholarship to relieve the financial burden while allowing my daughter to focus on academics. |
They came back with the conversion AND continued to keep her eligible for an equal amount of money through work study."