Opting for Student Loans? Here’s How to Make the Most of the Transaction

This is a sponsored conversation written by me on behalf of Navy Federal, who also may pay us if you sign up through our links to their services. However, the opinions and text are all mine.

These days, student loans are getting a bad rap.

Collectively this is probably justified given the job market, high volume of students borrowing and rising costs.

But for the well-informed, a federally subsidized student loan for a solid degree can be a huge win.

If you or your kids will be taking on student loans, here are some tips for making the most of the situation:

Maximize Other Funding Sources

Consider working a part-time job during the summer to earn money for the next school year. While it might cut into social activities, working during the school year is a smart move too. Both paths can help minimize student debt after graduation.

Applying for scholarships is also a wise decision – look at school networks, community organizations and religious groups as a starting point. Even current students can find scholarships through campus organizations.

Get the Best Rates

If you still choose to go with student loans, you need to make sure you’re getting the best rates. Federal loans are often a better financial choice for most than private loans. They offer the advantages of fixed rates, deferment until after graduation and rates that are now competitive with private loans.

First, start by completing the Free Application for Federal Student Aid (FAFSA®) onlineStudentaid.ed.gov provides helpful information for completing the application. If you need additional help, try the financial aid office at the college you plan to attend. You can also find helpful hints on each page of the online form as well as chat with live technical support. Expect to be asked for financial information, such as the balance of your checking and savings accounts and tax information. You’ll also have to report income from the prior two years.

If you opt for a private loan, consider comparison tools like Credible to find the best rates. They offer a marketplace for student loans and allow you to compare real offers from many lenders. Some lenders even accept lower credit scores with a co-signer. Or check out Experian Boost to see how you may be able to improve your credit score.

If you or your kids will be taking on student loans, here are some tips for making the most of the situation.

Make Sure It’s a Degree That Will Pay

A major issue with student loans is starting post-grad life with debt. You’re digging out of a hole from day one and in order to do so, it’s important that graduates earn as much as possible. That’s why the chosen field of study should be taken seriously. Yes, it’s great having a college degree and all, but make sure the ROI (Return on Investment) has been considered.

Business Insider, in an article earlier this year, provide 15 degrees to consider to get the most value. Petroleum Engineering leads the way with a late career median pay of $187,000. Here’s the next 4 to round out the top 5:

Late Median Career Pay

  • Chemical Engineering: $133,000
  • Nuclear Engineering: $127,000
  • (Tie) Electrical and Computer Engineering: $126,000
  • (Tie) Risk Management and Insurance: $126,000

Obviously, not everyone can be an engineer but you get the idea.

Best College Value

Look for a college that provides the most value. Look at what you can expect to earn versus what you paid in tuition. Obviously, a lower cost of education and higher earnings potential brings the most value. In December 2015, Kiplinger published a list of the top public universities that provide the most value:

  • University of North Carolina
  • University of Florida
  • University of Virginia
  • University of California, Berkley
  • University of Michigan

While we’re on the topic, attending school in-state versus out-of-state is a huge cost savings! Don’t cross state lines unless you have a scholarship to cover the additional costs.

College is simply too expensive to mess around. While it’s difficult to consider immediately upon graduation, you must start thinking of yourself as a business person. Upon receiving your diploma, consider yourself as your own corporation ­– You.INC. You must think about what you’re going to do to invest in yourself to bring a solid return while propelling yourself into the future.

Have a Plan to Aggressively Pay Them Off

According to StudentLoanHero.com, in 2012, 71 percent of students who graduated from four-year colleges had student loan debt. The average debt was $25,550. So, with all this debt, what is the young graduate to do?

Hopefully, you’ve found a career with great earning potential to get started but it’s going to take a while to earn near the salaries mentioned above. Here are a few tips to begin paying off debt with minimal income:

1. Start with a Budget

It’s easy to fall into many lifestyle temptations after graduating, especially with a new salary. Graduates need to create a budget with their top priorities being savings (establishing an emergency fund), paying off debt and any giving they plan to do.

2. Build a Debt Payment Plan

A debt payment plan will help get debts organized and understand the impacts of making extra payments. The name of the game is to eradicate debt as soon as possible so other goals can be started.

3. Earn Extra Income

Starting a new job is a lot of work and it takes time to learn the ropes. However, graduates should take the opportunity to freelance, work overtime or a side job, if possible. Earning additional income is the best way to pay off debt.

Head over to the Navy Federal Credit Union website, MakingCents.org, for additional resources to help accomplish your financial goals. Navy Federal is federally insured by NCUA.

This is a sponsored conversation written by me on behalf of Navy Federal, who also may pay us if you sign up through our links to their services. However, the opinions and text are all mine.


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About Philip Taylor, CPA

Philip Taylor, aka "PT", is a CPA, blogger, podcaster, husband, and father of three. PT is also the founder and CEO of the personal finance industry conference and trade show, FinCon.

He created Part-Time Money® back in 2007 to share his advice on money, hold himself accountable (while paying off over $75k in debt), and to meet others passionate about moving toward financial independence.


    Speak Your Mind


  1. That’s great advice about going for a high-paying job. If you’ve done your homework along the way, there isn’t a reason why folks cannot train to become an engineer. Chemical engineers are in very high demand at the company I work for. While it is not for everyone, they sure do make a ton of money!