Avoid the 1.7 Trillion Dollar Student Loan Crisis

Student loan debt is the second highest cumulative debt in America, mortgages being the first. There are 44.7 million student loan borrowers and an average balance of about $37,000. That means that the average student loan payment every month is approximately $400. Student loan debt is astronomical and soul-crushing, and it’s devastating the rising generation. While we may not be able to change the $1.7 trillion dollar student loan crisis today, there are steps that we can take to avoid being part of it.

Saving for college is an important step towards ensuring a financially secure future. While taking out loans to cover the costs of tuition, housing, and other expenses may seem like an easy solution, it's important to consider the long-term effects of student debt. Here are some tips for staying debt-free during college.

1. Start saving early: The earlier you start saving for college, the more time you have to accumulate funds. Consider setting up a dedicated savings or investment account, or a 529 plan specifically for college expenses. Whereas 529 plans may not be the best fit for everyone, it’s certainly worth consideration.

1. Explore grants and scholarships: Grants and scholarships are forms of financial aid that don't need to be repaid. Look for opportunities through your school, local organizations, and online resources like Fastweb or the College Board. Many colleges offer need-based or high GPA scholarships. Even a few of these can go a long way.

1. Utilize government programs: The Free Application for Federal Student Aid (FAFSA) is a key resource for paying for college. It's used to determine your eligibility for federal grants, loans, and work-study programs. Make sure to complete the FAFSA each school year to maximize your financial aid opportunities. FAFSA eligibility can vary greatly depending on your situation. If you’re under 24 and single, it will likely take your parents’ income into account. If your parents make a lot, you’ll probably receive less in FAFSA funds, but it’s still worth the quick application! However, if you’re 24 or older, married, on active duty, or have dependents, it will base eligibility off of your income.

1. Consider working part-time: Earning money through part-time work can help offset the costs of college. Look for on-campus jobs or work-study opportunities, which often come with the added benefit of flexible schedules. It’s a lot to handle at once, but working through college can save you tens of thousands of dollars in student loan debts decades down the road.

1. Be strategic with loans: If you do need to take out loans to cover some of your college costs, be strategic about which ones you choose. Federal student loans typically have lower interest rates and more flexible repayment terms than private loans. Only take them out if absolutely necessary and don’t take out more than you can repay quickly.

1. Make a budget and stick to it: Creating a budget will help you prioritize your expenses and ensure you're not overspending. Be mindful of your spending habits and cut back on expenses where you can.

1. Attend a college you can afford: Let me emphasize here: this is the most important tip. Choosing an affordable college is going to be the most important factor in being able to afford your higher education. If you have your sights set high on a more prestigious school, consider enrolling with a less-expensive community college for your general education classes. Employers generally only look at the degree, not where it’s from. If you do change schools during your 4 year degree, check which credits will transfer before you take them.

Whatever you do to make it through college, do your best to avoid the shackles of student debt. You can spend years paying thousands of dollars only to have your total loan balance go UP with interest rates. Saving during college may seem daunting, but it's worth the effort. By starting early, exploring financial aid options, and being smart about your spending, you can graduate debt-free and set yourself up for financial success in the future.