As the cost of higher education continues to rise steadily, more students continue to take out student loans to fund their higher education. They end up graduating with huge debts to repay. Since some graduates earn a low income, they might up filing bankruptcy.
According to a 2018 report by Hoyes Michalos, student debts contributed to 17.6 percent insolvencies in Ontario. Out of every six students with debts, one person filed bankruptcy forms. That has forced students to adopt tricks than can help them avoid massive debts.
Massive student debts can be overwhelming, especially if you earn a low income. In this article, we explore some of the useful tips to avoid huge student debts in 2020.
How to Avoid Massive Student Debts in 2020
The best way to avoid massive student debts is by taking out loans that you can quickly pay when you complete your college or university education. Here are some of the things that can help minimize or completely avoid huge student debts.
Apply for Many Scholarships and Grants
Besides student loans, many funding options for post-secondary education are available, including scholarships and grants. The good news is that scholarships are non-refundable financing options, and they should be your top priority when looking for financial aid.
Thankfully, many organizations and companies such as Knowledge First Financial offer scholarships to top-performing students who cannot fund their higher education. You can read the Knowledge First Financial reviews to get more information about the scholarship.
If you search for scholarships on the internet, you will find hundreds of opportunities available in Canada. You can narrow down your search by using scholarship search engines that will help you find the right opportunities based on your interests.
Make Good Use of the Grace Period
When you take out student loans, your lender will offer you a grace period after graduation or after you stop attending college. As a responsible student, you should not ignore your debts during that period. Instead, you should start planning on how to repay it.
You should take full advantage of the grace period by establishing a repayment plan and also to understand the loan better. You can even start making payments when you get employed during that time. You must not wait for the period to elapse to make payments.
Understand Your Student Loans
You need to understand the loan you’re dealing with and how it works before you start making payments. After graduation, you should keep track of all the loans you took to fund your higher education, including the private lenders.
Most importantly, you should understand the payment options for each loan. With some loan types, you can choose to repay your debts using the income-based repayment plan. Ensure that you select the best payment plan that can help you manage your funds.
Attend a Lower-Cost College or University
It’s no doubt that top private universities and colleges charge higher tuition fees than state colleges. Attending a public college or university in Canada can help you save thousands of dollars that you would have spent in a private learning institution.
One of the best ways to avoid massive debts is by enrolling in a lower-cost public college or university. You will only need to borrow a low amount of student loans to finance your post-secondary education.
Continue Living the ‘College Life’
When you’re fresh from college, you don’t need to upgrade your lifestyle before paying your student debts because that may hinder your payments. Now that you have a job and you are making some money, you should work towards paying your debts first.
You can continue staying with your roommates to share rent expenses. Besides, you can cut unnecessary costs like concerts and pricey dinners to reduce your expenses and save more money.
Expand Your Sources of income
Paying all your debts can be easy when you earn a significant amount of money. So, you need to look for ways to boost your income. If you currently have a job, you can negotiate for better salaries. Alternatively, you can apply for high-paying jobs.
Please don’t rely entirely on your job’s income. You can start a side business depending on your interests and earn extra cash. Another way to increase your income is by selling the items you no longer use.
Create a Budget and Stick to it
Working within a budget is of crucial relevance when it comes to financial planning and management. You should create your monthly budget, and include what you need to pay for your debts. The best way to stick to your budget is by tracking all your expenses.
Now that you understand some of the most effective ways to avoid massive student debts, you need to start working on them now. When making payments, you can begin with debts that charge high-interest rates. Try to cut back the unnecessary expenses and look for alternative sources of income to raise more funds to repay your debts.