How to Minimize Student Loan Debt

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Nick Mann

By Nick Mann

April 23, 2020

Student loan debt can be suffocating and can take decades to pay off. Once you graduate and are working, you’d much rather have your hard earned money going towards saving, retirement, buying a home, investing or the fun stuff – traveling and new experiences with friends. Student loan debt can delay all of these things and create a lot of stress. 

Because of this, you’ll want to do everything you can to minimize it. Here are some specific strategies you can use to keep student loan debt in check. 

Save Up in Advance


Any money you save before heading to college means the less you’ll have to borrow. So, it’s smart to build up as much as possible ahead of time. 

529 saving plans are one of the best options and can cover many expenses, such as tuition, books and computers. They also offer some outstanding tax benefits, like not being subject to federal tax and qualifying for an annual gift tax exclusion. 

Or, you can use apps for college savings, such as UNest, Chime, Qapital and Acorns. These can be incredibly helpful, especially if you struggle with saving. UNest allows you to open and manage a 529 saving account.

Be Wise When Choosing a College

One trap many people fall into is opting for a “glamorous” college over a more affordable one and racking up major student debt as a result. This may come with more prestige, but it’s often impractical and costly. 

That’s why you should be wise when choosing a college and consider the long-term costs. For example, you can often save a lot by attending an in-state public college rather than an out-of-state or private one. “On average, it costs $8,990 more for students to attend a college or university in a state where they are not a resident,” explains the National Center for Education Statistics.  

In some cases, it may even make more sense to attend a community college for two years and then transfer to a four-year institution to save on tuition. 

Look Into Free Funding Sources Before Borrowing

There are many ways you can get free money for college. These include: 

Therefore, it’s best to exhaust these types of resources before turning to a lender because it can greatly reduce your student loan debt. And in some cases, you may even be able to avoid student loans altogether. 

Opt for Federal Loans Over Private Loans

Once you exhaust all other resources, if you have to borrow student loans, choose federal loans whenever possible and exhaust them before moving onto a private lender. Here’s why. 

Federal student loans come from the government, whereas private loans come from private organizations like banks and credit unions. The former have terms and conditions that are set by law, while the latter are set by the lender. So generally speaking, private loans tend to be more expensive. 

Besides that, federal student loans offer several benefits, such as:

  • Fixed interest rates and borrower protections
  • Potential to have your loans forgiven, depending on your job
  • Options to pause payments if you lose your job or establish an economic hardship
  • Options to make lower payments based on your income
  • Potential for loan cancellation, proposed by Congress

Only Borrow What You Need 

Another mistake students sometimes make is viewing student loans as “free money.” In turn, they may end up with excess funds but still have to pay back the interest.  

Therefore, it’s critical to carefully calculate what you’ll need and don’t over borrow. You can use a free tool like the College Savings Calculator to streamline the process and predict how much tuition will cost. 

Use student loans for essentials only, including tuition and essential living expenses. 

Reduce Your Living Expenses 

Roughly half of a college student’s budget goes toward housing, says The College Board. Combine that with other living expenses like food and transportation, and the costs can add up in a hurry. That’s why you should also be conscious of your living expenses and not just the cost of tuition.  

For instance, The College Board mentions the cost of room and board at a notable college like Stanford is nearly double what it is for one like the University of Central Missouri, mainly because of the higher cost of living. 

More importantly, look for ways to reduce your living expenses. Some ideas include:

  • Looking for a college in an area with a relatively low cost of living
  • Living with your parents if it’s feasible
  • Living off-campus with roommates to split the rent
  • Buying used textbooks instead of new ones
  • Eating out less often
  • Keep expenses to essentials

When you put it all together, the savings can be substantial.

Need help creating a budget? Quicken is a budgeting software that allows you to connect your accounts and automatically categorize spending. Create a personalized budget and track and manage your spending.

At, our goal is to help you make smart decisions about saving and paying for education. Some of the products featured in this article are from our partners, but this doesn’t influence our evaluations. Our opinions are our own.

A good place to start:

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