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Student debt in the U.S. is becoming a serious problem. Some are calling it Sub-Prime 2.0. Recently, the amount of student debt in the U.S. topped $1 Trillion and it looks like that number is going to do nothing but rise. A big problem lies with the 15 percent of student borrowers who have private student loans, compared to federally subsidized loans.

Most people don’t understand the difference between the two types of loans. The reality is that private loans can lead to a lifetime of debt if not careful. Institutions like Fannie Mae and JP Morgan Chase back private student loans and they charge a variable interest rate that can climb into the double digits. Federal subsidized loans can be as much as half of that. A recent story on Bloomberg TV stated that one student signed up for a private student loan online as an 18 year old and it was as easy as signing up for iTunes.

I am lucky that my parents did a great job saving for my college education and I have never had to worry about paying back student loans. I can only imagine what someone who has $100,000 worth of student debt at a 10 percent interest rate must be going through. Knowing that every month your payments are going towards paying down the accruing interest charges and you are not even making a dent in the principle amount is something no one wants.

Luckily, there are some ways that you can get a great education, work in the career field you want to and also leave college debt free.

Ways to Graduate College Debt Free

Attend a No-Loan University

Over the past several years, many of the top universities have adopted a no-loan or few loans policy. This is an attempt for the universities to use their large endowment funds to help reduce the debt of their graduating students.

In 2010, the cost of tuition at Yale was $51,573. The cost after a need-based award for families earning $120,000 was $15,800. The cost for a family earning $80,000 would be just $6,467. This helps allow the tuition costs for private schools to be more inline with their state school counterparts. Yale is currently just one of over 50 college or universities that has started to help students eliminate debt at graduation.

Do a Cost/Benefit Analysis on Your Degree

So you are paying $30,000 a year to get a degree in music and now you’re thinking about graduate school, huh? Don’t get me wrong; there is nothing wrong with a music degree. However, unless you have an inside track on being the next Lady Gaga, it might take you awhile to payback the more than $100,000 in student debt you will have by the time you are finished.

To justify the high tuition you are paying, you need to make sure you are going to be able to pay back your debt quickly. If not, it might be time to reconsider your choice of majors.

Get a Job

While I might not have needed to worry about paying for my own tuition for a secondary education masters degree, I still had a job while I was in college. I needed this to be able to afford to go out with friends, buy my food and any other things I might have wanted to do.

I knew several people who were paying their own way through college and they held multiple jobs to be able to graduate without as much debt hanging over the heads.

Don’t Be Dependent on Your Credit Card

I am a supporter of college student credit cards, because they are a great way to start building good credit at a young age. It is, however, extremely important that you use them sparingly even if you do get approved for the best student credit card. By becoming too dependent on your credit card, you can find yourself in a lot of trouble.

Start at a Community College

Starting at a two-year college is the choice of many college students. Two of my friends even went this route. They were able to get most of the core classes taken care of and save a lot of money. After they had their two-year degree, they transferred to The University of Iowa. One thing that you need to be careful about if you go this route, is making sure that all of your community college credits will transfer.

Take a Year Off After High School

Because of how much college tuition has increased over the past several years, taking a year off after high school has become a popular choice. Instead of going directly to college from high school, you could take a year off to work. This will help you save up money and allow you to wrap up college in a better financial position.

Compared to everyone else in my grade, I was young when I graduated high school. I probably would have been much better off had I taken a year to mature before heading off to college. I was much more a fan of having fun then I was of actually picking up a textbook to study. It wasn’t until a couple of dropped classes (wasted money) and a near miss at academic probation, did I finally get myself on track.

Final Word

College tuition is getting more and more expensive each year. Until individual states of the federal government come up with a solution, students need to do whatever it takes to ensure a little to zero debt when they enter the workforce.

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