How High School Students Can Plan to Pay Off Student Loans

The subject of whether a high school graduate should attend college has become controversial, particularly in recent years. Some argue that college isn’t quite as “necessary” as it once was. This is particularly true due to the state of the job market and the rising costs of college in the United States.
However, this argument isn’t necessarily supported by facts – or at least, by current statistics.

The Value of a College Education: Breaking Things Down

According to NCES, employment rates were higher in 2017 for 25 to 34-year-olds who had obtained higher levels of education versus those who hadn’t. During that time, the employment rate for young adults with a Bachelor’s Degree or higher was 86%, while it was 72% for those with only a high school diploma.

Likewise, another study conducted by the American Institute for Economic Research revealed that even though tuition rates are on the rise, so are income levels for college-educated workers. In general, college graduates between the ages of 25 and 32 tend to earn about $17,000 per year more than those who didn’t attend college.

What’s more, the income levels for those with no college degree of any kind are actually trending downward. All told, the unemployment rate for millennials who do not have a college degree is roughly three times higher than those that do.

None of this is to say that you explicitly need a college degree to live a happy life and have a successful career. It’s just that investing in a college education can provide opportunities that may be difficult to obtain otherwise.

The Debt Factor

For those who have decided that college is worth the investment, the next most pressing issue is debt.
Many high school students are dissuaded from pursuing a degree because of the debt that they’re afraid of accruing. But at the same time, it’s critical to understand that debt won’t negate one’s need (or desire) to go to college to afford a comfortable life.

Yes, the college of your dreams may be expensive. If you aren’t awarded scholarships and can’t pay for each semester out of pocket, private student loans can become one of your only options.
While the loans may seem overwhelming, it’s important to understand that the process of paying them down may not be as daunting.

Debt can often be paid down quickly and easily with a well-paying job. In many cases, a student needs a good education from a reputable university to attain those jobs. Beyond that, there are different methods that high school students can use to pay off their student loans.

You don’t need to be a millionaire, and you don’t need to win the lottery immediately after graduation. You just need to keep a few key things in mind.

Paying Down Student Loans

When it comes to paying off student loans, sometimes the decisions you make before college can be the most impactful. For example, it’s important to think long and hard about the major you choose in the first place. It goes without saying that some majors have better employment outlooks than others.

It is critical to think carefully about your major because it could eventually determine the industry you’ll be working in. Make sure that you consider majors with A) a good employment rate and B) salaries that provide the financial flexibility to save money and pay off student loan debt. Today, choosing a practical major over a “fun” one can give you a head start when paying off your student loans.

It’s also important to carefully consider your choice of school. Think about WHY a certain university is the “school of your dreams.” Is it because there’s some type of specialized education you need that can only be obtained in a few select locations?
Or is it because you like the idea of living in a particular place? The former is likely worth the investment. The latter, if it is truly the only reason, isn’t nearly as important as you think it is.

Addressing Loans as a College Student

By far, the most important thing you can do as a college student to help pay off student loans involves taking advantage of any opportunity to make (and save money).
Some students fall into the trap of “living” off their student loans. For the purposes of managing that debt over the course of your lifetime, this is a mistake. It won’t always be easy (or fun), but if you have time to take on a part-time job, you should absolutely do so. This can make a world of difference and save you money in the long run.

If you’re not living off your student loans, you can probably take out less money in the first place. This puts you even closer to your goal of paying everything off.
Likewise, think about opportunities that double as ways to support yourself financially AND to advance your chosen career. Look for paid internship opportunities that will allow you to make extra money and develop the skills you’ll need in your career. Even work-study can fulfill these purposes. The average work-study program allows you to earn at least the federal minimum wage of $7.25 per hour. It could be more if your state’s minimum wage is higher.

Post-Graduation and Beyond

Once you graduate and enter the workforce, you’ve reached the point where most people usually BEGIN thinking about how they’re going to pay off their student loans. Provided that you’ve followed the tips above, you’ll no doubt be in a better position than most.
Now, it’s time to build on those strategies.

If you have the financial need to do so, consider getting on an income-based repayment plan for your student loans as soon as possible. This will allow your monthly payment to “grow” as your salary (theoretically) does the same.

Your payment will be set as a percentage of your income, NOT based on the amount of debt you have. This makes it easier to complete payments in the short-term.
Likewise, the experts at Forbes and other publications recommend refinancing your loans as soon as you can. This takes your existing loans and consolidates them into a new, single loan with a lower interest rate. If nothing else, this means you only have to make one payment per month.

Once you have the financial ability to do so, increase your monthly payment as much as you can. Not only will this allow you to maybe pay your loan off faster, but you’ll also save a significant amount of money in interest costs over the lifetime of the loan.

Further Down the Line

At this point, you should also think once again about your ultimate goals in life. Chances are that you are a different person post-college than you were in high school.
This is good because it reflects personal growth. But, it does require you to rethink your loans within the context of what you want your life to be.

For example, if starting a family is your dream, you’ll have to figure out a way to support that goal while still managing your student loan debt.
It’s possible, and in truth, it shouldn’t cause you stress. With the right planning and thinking ahead, there’s no limit to what you’ll accomplish.

Finally, a word of warning: while student loan forgiveness programs (or options like REPAYE) do exist, students and parents need to understand how loan forgiveness can be obtained.
You can explore it and research. But, you probably should not rely on it as a guaranteed option, and you probably should not choose a major solely because forgiveness is a possibility down the line.

In the End

Again, college is expensive. In fact, tuition costs are only going to increase. But instead of looking at a degree as “money to be owed”, you need to see it for what it really is: An investment in your future.

A college education can and will make a big difference over the long-term. This is true both in terms of finances, and quality of life. Yes, you’ll likely have to accrue a bit of debt along the way. But debt doesn’t mean that you can’t enjoy your life to the fullest.

With a little bit of planning, hard work, and perseverance, an investment in education will be one that will pay dividends for decades to come. With every effort in place, paying off debt is achievable.

Writing those checks won’t always be fun, and it will require hard work. But college is one of the most worthwhile things that a person can do.