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Forty-five million Americans currently hold student loan debt, with an average balance of $32,000. At $1.6 trillion, it is now the biggest source of consumer debt after housing. Borrowing money for school can help you achieve your educational goals. However, being informed about your financing options helps you make a sound decision. Here are some strategies for minimizing your debt while pursuing your dreams.
- Start with FAFSA. Colleges and universities use FAFSA (Free Application for Federal Student Aid) to determine what financial aid you may be eligible for. The form is free to fill out and is available online and even in a mobile app. The form opens for the following school year on October 1 (make sure to be aware of state and national deadlines).
- If you are offered student aid, understand the types of aid you are offered and compare the offers you may receive. Unsubsidized, subsidized, and private loans differ in their terms and the interest rate you will have to pay. Typically, grants and scholarships do not require repayment.
- Knowing how much college costs and creating a budget plan can help you save money and spend your educational dollars wisely.
- Don’t borrow more than you will need. If you are offered more aid than you require, you may decline it. Graduating on time will also help reduce the amount of money needed to fund your education.
- Make a plan for repayment after graduation. You can use bonuses, raises, and tax refunds to pay down debt faster and save money on interest.
- If you are having trouble repaying your student loan, the first step is to contact your servicer to discuss options.