How to Minimize Student Loan Debt

Young woman studying for student loans, scholarship applications, or financial aid at café.

BIG Ideas:

  • The average total student loan balance in America today is over $40,000.
  • Having too much debt after school can strain your budget and keep you from achieving other financial goals after college.
  • Maximizing financial aid, applying for other scholarships and grants, and making loan payments while you’re in college can help lower college costs.

Lifelong friendships. Unforgettable memories. Valuable knowledge and skills.

There are so many good things you’ll take with you from your time in college.

One thing you don’t want to carry with you, though, is high student loan debt.

However, with the average annual cost of college exceeding $43,000 per year at private institutions and over $24,000 for public out-of-state schools, affording college can be a significant challenge for students and their families. It’s no wonder that the total average student loan debt balance (including private and federal loans) could exceed $42,000.

You may wonder if it’s worth it.

The answer is, YES! A college education is a very sound investment that can help increase your earning potential and career prospects. The key to affording it is not to borrow more than you need, which could drain your budget and keep you from reaching other goals you may have after college.

So, how exactly can you minimize student loan debt? Here are some guidelines that can help: 

  • Have the money talk. Let’s face it, you have a lot of options when it comes to colleges. The key is choosing one that’s within your budget. Have a money talk with your family before you apply to schools to discuss the costs involved with college and how you will pay for it. For example, will your parents contribute to the cost of school? How much will you contribute toward your own education?
  • Look at more affordable schools. If you don’t have the budget to afford your dream school, choose a more affordable alternative. One option is to attend a community college for the first two years and then transfer to your dream school. Another option is to look at schools closer to home, where you can commute.
  • Borrow only what you need. If you apply for a loan, you may not need the maximum amount the lender offers you. You’ll end up with debt regret later if you borrow more than you need now.
  • Consider refinancing higher-interest loans. If you have private or federal student loans with high interest rates, refinancing could save you money. Keep in mind, if you refinance federal student loans with a private loan, you’ll lose certain benefits, including income-driven repayment and loan forgiveness. Learn more about refinancing.
  • Make interest or extra payments while in school. Another way to reduce debt is to make interest-only or principal and interest payments while you’re in school, versus deferring payments until after you graduate. You can also make extra payments to reduce the amount of money you owe.
  • Pay on time. Late or missed payments will be added to your loan balance and cost you even more.
  • Look into student loan forgiveness. With federal Public Service Loan Forgiveness, you could have your remaining student loan balance forgiven if you work for a qualifying employer in a public service position and meet other requirements.

Brazos Can Help Make College Possible – and Affordable

For more than 40 years, Brazos has helped make college costs more affordable for parents and students. As a Texas non-profit lender, we offer competitive rates on private and refinance loans that can help you save. Contact us to learn more.