Managing Student Loans

Students are increasingly wary of running up high levels of student loan debt to finance college as costs rise year on year. Whilst it helps to be born into a wealthy family with a silver spoon, there are other ways of avoiding student loans and graduating with little or no debt. The latest available figures issued by the National Post Secondary Student Aid Society show that whilst student borrowing is high, 34.4% of students do not utilize student loans.

The best way to avoid student loans is to plan ahead carefully for college and excel in ones studies. Students whose academic and personal achievements make them good catches can attend the top colleges in the nation without borrowing, providing that they qualify for financial aid. The Ivy League universities have replaced merit aid with financial need aid, in keeping with their needs blind admissions policies. Some have replaced all student loans with institutional aid, thus guaranteeing no need for student loans to students who qualify for financial aid.

In order to qualify for financial aid the FAFSA needs to be completed and submitted. This application does not only give access to federal student loans but to federal and state grants. Whilst grants will not cover the full costs of attending college they can add up when state, federal, institutional and private grants are all utilized.

External and institutional scholarships are an excellent way to fund college. Some colleges offer institutional scholarships as part of their financial aid package. External scholarships are widely available based on merit, needs, and athletic ability, and students who search the scholarship databases early have the most opportunity in realizing one.

Those who meet the criteria for financial aid are awarded federal work study as part of their financial aid package. This will cover personal expenses which the student incurs, thus reducing the need for unnecessary borrowing. Students who work during the vacations can also decrease the amount they would otherwise need to borrow, but may need to give up a portion of this as the student self help contribution which many colleges now require.

Whilst student loan forgiveness naturally means loans must indeed be utilized in order to be forgiven, there are some excellent programs available to those planning to work in the public sector. Whilst federal forgiveness programs are not guaranteed, it is possible to obtain state forgiveness in advance, providing that the terms of the program are adhered to. Individual states offer tailor made programs for students who plan to work in the public sector after graduation.

To avoid the necessity of student loans one really needs to qualify for financial aid or be too rich to need it. Students from families with higher than average earnings, have less opportunity to avoid student loans. Scholarships and forgiveness are the best option in these cases.

Source: Finaid