Other ways to cut down on college debt

All his life James Moreau was told college was an investment in his future, so he shouldn’t worry about borrowing too much.

“It was always like, ‘You’ll deal with that when it comes,’” says Moreau, who graduated from Suffolk University (www.suffolk.edu).

College is an investment, but borrowing a ton of money to pay for it can hurt years after graduation. That’s what Moreau learned when he ended up owing $120,000 in federal and private student loans even though he worked three jobs during college. He paid $1,300 a month before getting laid off in February from his job with a career website.

According to CNN Money, the average amount of loan debt in 2012 was $29,400 per student. This is up from the average of $26,600 per student just a year ago in 2011.

How do you keep this from happening to you? Fill out the Free Application for Federal Student Aid (FAFSA), the form that gets you considered for aid from colleges and the federal government. Get a job. Apply for scholarships. But you’ve probably heard all this already, right? Those things are important, but there are other ways to reduce your debt.

Doing well on the SAT or ACT doesn’t just help you get into college. A good score also frees up merit-based aid from colleges, says Tim Higgins, author of Pay for College Without Sacrificing Your Retirement.

Don’t know what job you want as a new college graduate? That’s OK. But if you have some idea of what you’re interested in, you might not have to switch majors in college. And the less time you spend in college, the less you’ll owe, Higgins says.

If you know what kind of job you want, look up how much money entry-level workers make. Some financial planners advise against paying off student loans with more than 15 percent of your income. When you’re deciding how much to borrow, find out the expected monthly payment.

Two years of community college will save you thousands in tuition and living expenses. Transfer to a four-year school afterward and you’ll have that fancy-school degree with a lot less debt.

Public colleges charge much less if you live in the same state, but you might be able to get that rate even if you don’t live there. Sixteen states belong to the Southern Regional Education Board, which allows you to pay in-state tuition at another state’s school if you can’t get the degree you want closer to home. Lots of states have these arrangements. Also, some colleges give more money in loans than grants. Apply to schools that award mostly scholarships and grants.

Each college has an endowment, a pot of money that keeps the school running. A lot of endowment money pays for scholarships. Higgins advises looking for private colleges with big endowments, since they probably offer good scholarships.

Colleges can see where you’re sending your FAFSA information, so list each college you’re considering. Apply to and list an in-state public school even if you don’t want to go there. Higgins says this could give you more leverage with the financial aid office.

If your first-choice school didn’t offer enough aid for you to afford it, it doesn’t have to be the end. Higgins says most students don’t ask the financial aid office for more. You and your parents should just say you really want to go to that college, and ask if there’s any way to increase your award. 

But this might not work, says Cathy Simoneaux, director of the scholarship and financial aid office at Loyola University New Orleans (www.loyno.edu). “There’s a limited amount of money that the school has to give out,” she says.

You’ll have better luck appealing under special circumstances, like if your mom lost her job or your dad has expensive medical bills.

Once you show up on campus, find out what classes you need to graduate on time and make a plan to take them in the right order. Your professors or academic advisor can help you pick courses you can handle, so you don’t load up on hard classes.

Many college scholarships last more than once a year, but only if you graduate in a certain time frame or keep your grades up. Moreau spent his first two years at University of Massachusetts Dartmouth (umassd.edu), which he says yanked his aid when he got poor grades.

College classes are much harder than high school. But there are a bunch of places on campus that can help, like the writing center, tutoring office or math center. It’s OK to get help with a tough assignment. 

“That’s part of your tuition charge, and you’re paying for it,” Simoneaux says. 

Extra resources

• bls.gov/oco: Find out the demand for different jobs and how much they pay.

• careerdimensions.com: Take tests to learn what jobs you might be good at and find schools to help you get them.

• collegeboard.com: Pages on colleges say how much money they award and how much the average graduate borrows.

• NextStepU.com/Scholarships: Find college-specific scholarships for good grades, community service and more.