6 Ways to Avoid Major Student Loan Debt for College Students

If you’re a college student with a student loan, you may be facing huge amounts of debt by the time you graduate! These six ways to avoid major student loan debt are from Ethan Ewing, president of Bills.com.

Before the tips, a quip:

“The roots of education are bitter, but the fruit is sweet.”  ~ Aristotle

The roots of education are also expensive…and hopefully the end results are worth it. Here’s one of the best tips for avoiding major student loan debt: read Debt-Free U: How I Paid for an Outstanding College Education Without Loans, Scholarships, or Mooching off My Parents by Zac Bissonnette. It’s a bestselling book on Amazon – probably because Zac isn’t struggling to pay back his student loans! Might be worth a peek.

And, read on for six ways to avoid major student loan debt for college students…

6 Ways to Avoid Major Student Loan Debt for College Students

1. Live within your means. Getting a student loan for college can be considered an investment in the future, but don’t go into deep debt to fund a lifestyle. “Plenty of people who have the latest fashions and tech toys, or drive the newest cars, do so under a tremendous debt burden,” says Ewing. “Staying out of debt is immensely more satisfying in the long run.”

For more money saving tips for college students, read 7 Tips for Saving Money on Your Grocery Bill.

2. Create and use a budget. No matter how much or how little income students have – and whether they earn it, have student loans, or receive money from their parents – get in the habit of budgeting. Here are four simple steps to creating a budget:

  • Understand income. Add up all your incoming funds. Categorize ongoing monthly expenses into fixed expenses (like rent), variable expenses that are “must-buys” (food, gas, medicine, books, supplies), savings and spending money. The total is your cost of living.
  • Subtract expenses from income. If that number (bottom-line cash flow) is negative, take a hard look at the budget and find a way to either increase income or reduce expenses.
  • Map it. At the first of the month, map out a plan for spending in the coming month. That is your budget or spending plan.
  • Save part of all income. Get into the habit of saving for the future. Try to deposit 10% of any paycheck directly into a savings or money market account. Your goal should be to accumulate enough funds to cover expenses for three to six months in case of an emergency. This emergency fund can help you avoid charging unexpected costs on your credit card.

4. Pay bills on time. To avoid the major student loan debt that many college students accumulate, make sure you open every bill as soon as it arrives, then pay immediately or create a simple system to it, whether with a folder on your desk or an online calendar. College students who are responsible for routine bills such as phone, utilities or rent can sign up for online bill payment, where automatic scheduling eliminates forgotten bills. Make sure funds are available in the account on the bill due date.

If you struggle to pay your bills and are creating more debt, read the Most Popular Money Articles – Financial Tips and Goals.

5. Pay credit cards in full. To avoid the major student loan debt that many college students accumulate, make sure you pay your credit card balance in full every month to avoid finance charges, build a good credit score, and stay out of debt. Paying less than full payment each month begins a cycle of fees that is difficult to end. In addition, paying less than the full amount means that the original purchase will end up costly significantly more than its purchase price (through interest rates).

6. Build and protect your credit score. A good credit score can significantly impact your ability to borrow money and the interest rate. Credit scores also can affect the ability to rent an apartment, lease a car, or even get a job. The first step is to monitor your credit reports. All consumers – including college students – can access credit reports once each year for free at Annual Credit Report.com. If your credit report shows any inaccuracies, correct them right away. Then make sure to pay every bill on time, all the time!

Don’t be afraid of getting a student loan – read 5 Reasons to Get a Student Loan If You Can’t Afford College.

If you’re not thrilled about going to college – but you want your degree or diploma – read 5 Ways to Stay Motivated to Go to College – From Bored to Inspired!

I welcome your comments on these ways to avoid major student loan debt…

11 Reader Comments

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  1. Hilary says:

    Some college students would never go to school without getting a student loan! Student loan debt is inevitable for some of us, though it’s good to have tips for avoiding excessive debt.

  2. Thanks for your tips on avoiding major student loan debt, Ed! I agree that taking money out of ATMs and paying the fees is a huge waste of money. Most banks offer free transactions if you have a certain amount of money in your bank account…but of course students don’t have that much money…

  3. EdH says:

    There are also a lot of little things. Avoid ATM machines, unless they are no fee. Taking out $20 at a time with a $2 charge is murder. I know most students rarely use cash, but sometimes you need it. Also, be realistic about what you need versus what you want. Take full advantage of your meal plan, if you are staying at a dorm – most students leave balances on theirs. Make sure your bills are sent to the right address, so during break you won’t miss any. Some bills still can’t be sent electronically, so you still need to check the mail.

  4. Nico says:

    Good points! If you are a student, and especially if you are accumulating student loans, you should be disciplined and always stick to your budget, so you don’t accumulate more debt.

  5. Laurie Pawlik-Kienlen says:

    Thanks for your comment, Richard…unfortunately, student loans seem like those “necessary evils” for many college kids! But I’ve learned that some students spend their student loans on non-school stuff (electronic equipment, cars, tools, etc)….which doesn’t make me feel as bad for them when they leave college and have to pay massive tuition debts.

  6. Richard says:

    Every student should read this. Too often, kids exit college and are strapped with massive tuition debts. These suggestions will help them!

  7. Laurie Pawlik-Kienlen says:

    Interesting idea…I hadn’t thought about blood donation to make money to pay off a student loan, or earn extra money for college. Here in Canada, people volunteer to give their blood away…they don’t get paid for it. People get paid for donating blood in the USA?

    And Janice, thanks for your comment. I’m glad your student loan was worth it!

  8. Looking for a part time job? Why don’t you try a blood donation. I think this is a very big help for college students who need extra money and can make up to $50/hour for blood donation. As we all know, blood bank shortages kill tons of people all the time and it is time to spread the word about blood donation and give blood, you will never know when YOU might need blood. This is really big help even it is just a part time or just once in while, the bottom line of this is to save lives.

    If you are thinking to be a blood donor and looking for specific blood banks and directory you can check it out at bloodbanker.com.

  9. janice says:

    I’m still paying my student loan after 10 years, but it was worth it. I haven’t made it a priority to pay it off faster than the normal payment schedule.

  10. Laurie Pawlik-Kienlen says:

    Hi Arsento,

    A student loan for college is an example of good debt! Some types of debt are actually investments in your future, which means they will earn you money in the long run. I’ve posted a couple of articles about “good debt versus bad debt” here on Quips & Tips. Here’s the link to one:

    The Difference Between Good Debt and Bad Debt

    Both my husband and I took out student loans to go to university. We both had our loans paid off within 2-4 years of graduation.

    Sure, it’s a drag to have to take out a loan for college….but I think it’s better to get a student loan and get your degree or diploma than to work for years to try to earn enough money to put yourself through college.

    Even though I had a loan, I also worked 2-3 shifts as a week as a waitress throughout university. My husband worked as a bartender. If you can get a job serving tables, the income from tips can be very high.

    I encourage you to think about keeping your student loan and going to college this year. Of course, I have no guarantees about your future! But, usually an education pays for itself in more ways than just financially.

    Good luck,

  11. Arsento says:

    I can’t afford to pay for even my first year of college without getting a student loan, but I know that debt is bad. I don’t buy things I don’t need — I don’t even own an ipod. I just can’t find a good paying job, and I want to go to school.

    I applied for a student loan and got it, but I don’t want to go into debt. I think I might forget about college this year, and work instead. Save up enough money so I don’t have to get a student loan. When I have enough to pay for tuition, books, and rent then I’ll apply to college.

    This sucks.

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