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These days, students leave college with an alarming amount of debt. This debt comes in the form of credit card bills that have piled up, student loan debt, car loans, and in store financing for items such as electronics. Add to this the fact that many students aren’t finding full-time, career level employment immediately after graduation, and the situation for some recent graduates is pretty bleak.

To make things even worse, many of graduating students have no way to pay even the minimum payments on their various debts. This makes them prey for collection agencies, pawnbrokers, and payday lenders.


However, all of the news is not bad. There are certain ways that students can avoid accumulating debt during college and being broke after they graduate.

1. Major in a Highly Marketable Field

While it is wonderful to pursue a field out of passion, it is not always financially practical.


Students who want to make sure that they are highly employable after college, and to make sure that they have a good chance of securing a high paying job, should research the salary ranges and employment numbers for careers that interest them. They should also research the schools they are considering.

School quality and reputation can have a huge impact on a student’s ability to secure a job after graduation. Here’s a great infographic for those seeking employment in the likes of Google, Apple and other tech giants.

Illustration for article titled How to Avoid Being Broke After College

via Wired.

Of course, none of this is an exact science. There have been many career fields throughout the years that were once highly in demand, but today one could struggle to find more than a handful of available positions in those fields today.


2. Be Flexible when Looking for a Job

Many students make the mistake of limiting to their job search to work that strictly matches what they majored in. This is a mistake for several reasons:

  • They could be cheating themselves out of a source of income in the short term.
  • They could be missing out on a job opportunity that could lead into their chosen field.
  • They could even cause themselves to miss out on the opportunity to develop certain skills and talents that will benefit them when they do find a job in their career of choice.

One thing worth mentioning, a large number of people end up working in jobs that do not relate to their majors, and end up being quite happy. This is often because while the job they find is not directly related to their major, they still use the same skills and talents.

3. Take on the Absolute Minimum Amount of Student Loan Debt Possible

In many cases, students are offered more in student loan funding than they need to cover tuition, fees, books, and other expenses. In some cases, it is necessary for students to use these extra funds for living expenses.


One example of this would be a student in medical school who has no time in their schedule to work. They may need the extra funding to cover their living expenses until they are finished with school. Unfortunately, many students take on the extra debt because in the short term it seems like free money. Then, when they are required to pay the money back, they are unprepared for the amount of debt they have accumulated once interest has been factored in.

4. Make Student Loan Payments While still in School

Students who take out federal student loans, and their parents, have the option to make payments on student loans. These payments can reduce the amount of interest that accumulates on the debt which will reduce the amount owed after graduation.


5. Contribute to a Savings Account

Students should make every effort to contribute a regular amount of money to a savings account while they are in school, and after they graduate. They should view this contribution as a regular expense. This way, they are not tempted to divert the funds earmarked for savings into money for social activities or entertainment purchases. This money can be used to cover emergencies, as it is a much better alternative to using high interest credit cards.


6. Don’t be Tempted by the Inevitable Onslaught of Credit Card Offers

Credit card companies use very aggressive techniques when it comes to marketing to students. They know that college students are young and impressionable, and that they are easily tempted with offers of credit. Initially, these offers can seem like great deals because they often feature very low interest rates. The problem is, these interest rates are introductory. In only a few months, a student can be thousands of dollars in debt at interest rates nearing 20 percent. It can years to pay off just 5000 dollars in debt when making the minimum payment.


7. Develop Miserly Ways

One great way to reduce the likelihood of being broke after college graduation is to seek ways to save money on expenses.


Here are several things that college students and recent graduates can do to save themselves money:

  • Purchase clothing for consignment and resale shops, or buy clothing on clearance off season.
  • Cancel cable in favor of less expensive movie streaming services.
  • Use internet when available instead of data to save on monthly phone charges. Use internet for free calls to mobile as well.
  • Pack lunches instead of eating in the cafeteria or going for fast food
  • Eat dinner at home
  • Budget your moving expenses in advance.
  • Rent movies instead of going out
  • Workout and swim on campus instead of joining a gym. Besides, most campuses also offer free sport classes and facilities these days.
  • Save money on alcohol expenses by volunteering to be the designated driver
  • Before going out check websites that feature coupons and special offers
  • Buy video games and electronics second hand
  • Walk, ride a bike, or take the bus to save money on gas

8. Consider taking on a Roommate

Having one or more roommates is a great way to reduce monthly rent and utility expenses. In fact, many young adults find that it is less expensive to rent a house with several people than it is to pay the expenses of living in the dorms, or renting an apartment after graduation.


Here’s a great guide of how to be a good roommate and an excellent calculator for splitting costs.

9. Develop Good Credit During and After College

Students who have good credit scores are at a distinct advantage when compared to those who do not.


For example, a student with a good credit score and a job can receive pre-approved financing from their bank or credit union when shopping for a car. This puts them in a great position to negotiate an ideal price with the car dealerships. Somebody without a good credit score will likely have to pay sticker price. They’ll also pay higher interest rates through ‘buy here pay here’ financing or lenders who specialize in low credit financing.

There is also another benefit to developing a great credit rating. Many employers now include a credit check as part of their pre-employment screening process. In many jobs, people with poor credit are considered to be a liability. Here are a few things students and graduates can do to improve their credit rating:

  • Make sure that checking and savings accounts are never overdrawn
  • Pay all bills on or before the date that they are due
  • Limit use of credit cards and pay more than the minimum payment each month
  • Don’t fall for offers to apply for credit. It isn’t worth a black mark on your credit report to apply for a store credit card for a 10 percent discount. Remember that applying for credit over and over again can reduce your score.
  • Ask a relative with impeccable credit to add you as an authorized signer to one of their credit cards. The purpose of this isn’t to use their card, but to increase your credit score through their good payment history.
  • Avoid bad debt. Don’t use rent to own places to buy electronics or furniture. In addition to this, avoid pay day lenders, title pawns, and other high interest lenders.
  • Check credit reports regularly to ensure that erroneous information is corrected.
  • Protect your personal and financial information

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