Minimize Student Debt

11 Steps to Minimize Student Loan Debt Students should choose a college wisely and get educated about loans before borrowing....
Minimize Student Debt

11 Steps to Minimize Student Loan Debt

Students should choose a college wisely and get educated about loans before borrowing.


Learn to borrow wisely for college.

The majority of students from the class of 2018 took out loans to pay for college, according to U.S. News data: 65% of graduates borrowed student loans, with an average total student loan debt of nearly $30,000. Sometimes this type of debt can be a wise investment, experts say, but students should exhaust all other sources of funding and financial aid for college before turning to loans. They should also carefully consider how much is too much to borrow. These 11 tips can help students either avoid borrowing altogether or keep their student loan debt at a manageable level.

Choose a college carefully.

Where students choose to attend college can make a big difference. While going to community college may not be the “glamorous choice,” it can be an option to avoid student loans, Rachel Cruze, co-author of “Smart Money Smart Kids,” wrote in a 2015 blog post on Attending community college can give students time to work a part-time job, save up money, earn credits and ultimately transfer to a four-year college to earn a degree for less.

Consider attending a no-loan school.

Schools may have unique policies around financial aid and student loans. Some colleges offer students who have household incomes under a certain threshold free tuition. Others are no-loan schools, meaning they have a policy of meeting the full financial need of students without relying on student loans. Two examples of these are Davidson College in North Carolina and Princeton University in New Jersey.

Estimate college costs.

Whether a student attends a community college and later transfers or starts at a four-year college, tuition is only the tip of the iceberg for college expenses. Students should also factor in books, housing, meals and transportation. A good way to see the net price of a college, which is an estimate of the amount students will actually pay after financial aid is factored, is to use a net price calculator. Students can use this tool to compare college costs and get a sense early in the process of out-of-pocket costs to anticipate and prepare for, Karen McCarthy, director of policy analysis at the National Association of Student Financial Aid Administrators, told U.S. News in 2019. Using a 529 college savings plan is one way families can prepare to pay these out-of-pocket costs.

Maximize other funding sources.

Once students calculate their total costs, they can figure out how to cover their expenses. Grants, scholarships and college savings plans should be used before student loans come into play, experts say. Students should also deduct potential earnings from any part-time jobs they may have from their total costs to determine what they need.

Start a side hustle or get a part-time job.

To offset costs and minimize borrowing, every cent put toward paying for college helps. Some students and recent graduates have taken to platforms like YouTube and TikTok to earn an income that can be put toward college tuition or, down the road, pay off student loans. Of course, the more traditional part-time jobs are also an option for students who are able to balance work with classes.

Limit living expenses.

Colleges set tuition and fees, so it should be easy to budget for those costs. Housing, meals and entertainment expenses are another story. It may be tempting to live in an expensive off-campus apartment or eat out every night, but borrowers and students hoping to avoid student loans should be frugal whenever possible, experts say.

Borrow only the amount needed.

Student loans aren’t free money. The more you borrow, the longer it will take to pay off your debt. Before signing on the dotted line, consider declining any excess loans. “We encourage reducing loans if they don’t need it,” says Sara Harrington, former associate director of financial literacy and academic progress at the University of Iowa.

Understand the payments.

At some point, student loans need to be repaid. Students should be clear not only on what the repayment terms are, but how much they will need to pay back. The Department of Education’s repayment calculator gives an estimate of monthly payments for federal loans under various repayment plans.

Know your salary expectations.

Once students have a sense of their estimated payments, they should also estimate their earnings after graduation. The goal is to owe less than what your starting salary will be after graduation, says Mark Kantrowitz, publisher and vice president of research at Consider which majors have the highest starting salaries, and use resources like PayScale or the Federal Reserve Bank of New York’s labor market outcomes interactive tool to learn more about salaries for various fields of work.

Evaluate student loan options.

“Always exhaust federal loans before going to private,” Harrington says. If federal student loans are insufficient or unavailable, evaluate private loan offerings, keeping in mind interest rates and repayment terms.

Keep tabs on borrowing.

College is not a one-year enterprise, and student loans pile up along the way. “It’s really important for students to be aware of how much they are borrowing,” Harrington says. “Not just one year at a time, but the cumulative effect of it.” Borrowers can use the National Student Loan Data System to stay on top of all their federal loans, including outstanding interest.

Find out more about college financing.

Visit the U.S. News Paying for College center for more tips and advice to help make college affordable. For those students who do take out loans, consider these tips from borrowers and experts on how to pay off student loans. And follow U.S. News on Facebook and Twitter to keep up with the latest news on student loans and more.

Tips to avoid or reduce student loan debt

  • Choose a college carefully.
  • Consider attending a no-loan school.
  • Estimate college costs.
  • Maximize other funding sources.
  • Start a side hustle or get a part-time job.
  • Limit living expenses.
  • Borrow only the amount needed.
  • Understand the payments.
  • Know your salary expectations.
  • Evaluate student loan options.
  • Keep tabs on borrowing.