Many see trade school programs such as welder training or plumber training as a promising alternative to university learning because you can acquire job skills that are in high demand, borrow less on student loans, and get a good job more quickly to help repay the student loans. However, students may still accrue debt. However, the amount of money you will need to pay back can be reduced if you consider the following five tips.
- Design and Follow a Strict Budget It is very important to follow a strict budget while attending school and avoid buying non-essential items. Assemble information about income and cash available to pay for bills. Collect information about all current bills and estimate any future expenditures that may arise while in school. This will likely include tuition, books, housing, etc. Find a method of tracking spending that works for you.
- Apply for Grants and Scholarships Maximize the use of grants and scholarships that do not need repayment. You can apply to as many as you qualify for, increasing your chances of receiving a significant amount of funding. The U.S. Department of Education recommends using the Free Application for Federal Student Aid(FAFSA®) to apply for financial aid.
Additionally, there is a number of free resources that can help you find other grants and scholarships from private sources, which include contacting federal scholarship information, state grant agencies, and using the U.S. Department of Labor’s search tool for scholarships. TWS, for instance, also offers various scholarships for those who qualify, such as members of the military or high-performing students.
- Save Money and Work During School The best way to minimize the amount of loans you have to take out is to save up money by working if possible. If you want to attend trade school to further specialize in your field or undergo a complete career change, then consider working in your current position until you have sufficient funds to finance your training. Use those savings before taking a student loan. Another option is to work while attending school and borrow as little as possible on student loans. TWS provides assistance to students who are in need of part-time employment.
- Learn About Different Loan Options It’s important to remember that student loans need to be repaid in the future – often at a considerable interest rate. Make sure to borrow the smallest amount possible that is necessary to complete school. If you do take out loans, compare federal student loan rates to private student loan rates to get the lowest interest rates; federal student loans are usually a better deal.
Federal student loans are interest-free while the student is in school, but private loans charge interest from the day you take out the loan. Be cautious with low private loan rates that are variable because they can easily increase in the future as interest rates go up. Stay on top of your loans’ interest rates so you can estimate how much money you will owe upon graduation.
- Know Your Repayment Plan It is crucial that you know the monthly (and overall) payment you have to make in order to repay your student loans. The Federal Student Aid (FSAID) website has an easy-to-use repayment calculator. Also, use the FSAID national loan system to track the total amount of student loans and interest due. Pay off student loans within the shortest time frame possible to reduce the total amount of interest paid.
Furthermore, you can change your repayment plan at any time. For example, if your income increases, you may want to consider raising your monthly payments to minimize the amount of interest due. A loan servicer can discuss workable repayment options with you.[i]
The choices can be overwhelming. If you need assistance, do not hesitate to contact the financial aid department.
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