15 Ways to Cut the Cost of Borrowing

How can reduce your dependence on college loans?

About this time last year, Mark Kantrowitz, the publisher of FinAid and FastWeb, sent me some suggestions on how families can reduce their dependence on college loans.

I am running the suggestions again along with links to some of my college blog posts that I’ve written on the same topics. Here are the tips:

1. Borrow less for your entire education than your expected starting
salary. Ideally, education debt should be less than half your
expected starting salary.

Read my post: College Debt: Don’t Borrow More than $27,000

2. Live like a student while you are in school so you don’t have to
live like a student after you graduate.

3. Save money in a college savings plan before enrolling in college.

Read my post: Why 529 Plans Are Great For the Wealthy

4. Search for scholarships on free scholarship-matching sites like

Read my post on an intriguing new scholarship search tool:

A New Way to Search for College Scholarships

Read my post: 7 Things You Need to Know About Private College Scholarships

5. If you enroll at an out-of-state public college, try to establish
residency first so that you can qualify for in-state tuition.

Read my post: Cutting the Price of Out-of-State Universities

6. Consider enrolling at a college with a “no loans” financial aid

Read my post: 63 Colleges With the Best Financial Aid

7. Compare colleges based on the out-of-pocket cost, the difference
between the cost of attendance and gift aid, such as grants,
scholarships and other money that does not need to be repaid.

8. Live at home with your parents. (Curiously, the debt reduction is
only significant for students who are at public colleges.)

9. Borrow federal first. Federal student loans are cheaper, more
available and have better repayment terms.

Read my post: Stafford Loans: Borrowing for College

Read my post: 2 out of 3 Student Loan Borrowers Are Struggling

10. Before buying something with student loan money, ask yourself
whether you’d still buy it at twice the price, because that’s about
what it will cost you after you’ve repaid the debt.

11. Pay the interest on unsubsidized loans during the in-school and
grace periods to prevent the loan balance from growing larger. This
will reduce the debt at graduation by about 20%.

12. Work part-time during the school year and full-time during the
summer to earn money for college.

13. Graduate with a bachelor’s degree in four years, not five or six.

Read my post: Who Graduates in 4 Years

14. Don’t switch majors or transfer colleges.

Read my post: Is Getting a Double Major a Dumb Idea?

15. After you graduate, accelerate repayment of the highest cost loan
first, namely the loan with the highest interest rate.

Lynn O’Shaughnessy is the author of the second edition of The College Solution, which was just released this month.  Follow her on Facebook, where she answers parents and teenagers’ questions on Fridays.

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