Nationwide, student loan debt has exceeded $1.5 trillion and continues to rise. Some reports suggest recent college graduates will spend one-fifth of their annual income repaying student loans.
1.) Do the math
Even if you are a freshman in your first year of college, you should have a good idea of how much your monthly student loan payment will be when you graduate, said Leila Dudley, a licensed financial planner at Columbia-based Mosaic Wealth Strategies LLC. Especially for lower-paying professions such as teaching and social work, it’s important to make sure you can afford the monthly loan payments.
“How much you borrow should be directly related to how much you can pay back,” Dudley said. “You basically have to look at it like an investment.”
2.) Get a part-time job
No, you aren’t going to pay for your college with a minimum-wage job. Working 40 hours a week and making $7.25 an hour, you won’t make enough in a year to pay the total cost of attending the University of South Carolina or Clemson University.
But that doesn’t mean that extra income can’t help. Paying in cash now means you won’t be paying interest later.
“I would recommend not borrowing any more than you need for tuition and then getting a part-time job to pay off all your supplemental expenses,” Dudley said.
Which brings us to the next point:
3.) Don’t borrow more than you need to
“Student loans can be used to buy supplies, and that includes textbooks, equipment needed for classes, or a computer,” Jill Gonzalez, an analyst for personal finance website WalletHub, said in an email. “Of course, if these can also be bought with cash, that should be the first option. It’s always best to stretch your student loan dollars as much as possible. Students shouldn’t be splurging on the latest gear or nice housing just because the money is available to borrow.”
4.) Get in. Get out.
Unless you attend one of the few schools that have cut tuition, the annual cost of college isn’t getting any cheaper. But spending one less year in college means a year less of tuition and a year more of income (hopefully).
Finishing college in less than three years is a budding priority of USC President Harris Pastides.
“We urge, almost to the point of requiring, on-time graduation, and even early graduation,” Pastides said in a meeting with reporters from The State. “The days of, ‘Mommy and Daddy will pay another year or two,’ — those days are gone. We want students to know we expect them to graduate in four or fewer years.”