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How to Minimise Student Loan Debt

Nicola Graham
Nicola Graham

With the exception of a mortgage, a student loan is likely to be the biggest debt you get yourself into during your life. And while it is currently interest free, it is still a big financial burden. How to minismise student loan debt

My current student loan sits at around $41,000 and I pay off the minimum amount from my salary. Because it is interest free and comes out automatically, I don’t really think too much about it. However when I do, I wish I could rewind the clock and live my student life all over again – after all a loan is a loan and paying it back means less money in my pocket each week. So while I can’t turn back time, I can provide a few words of wisdom on how to minimise the amount of student loan debt others run up.

Even though it is hard being a student, the truth is you might not need to borrow as much as you are entitled to. I certainly didn’t need to! I worked between 10 and 15 hours a week, worked more hours in the uni holidays, only paid $60 per week in rent and my parents helped me out in the first year.  But being stupid and living in the moment, I chose to take the extra $150 a week. If I had chosen not to, my loan would have been around $6000 less. And, if I’d saved even some of the money I earned in the summer break, I would have reduced my loan by another few thousand.

If you are a student, or the parent of a student, I’ll share my knowledge of what I’d do differently and other tips to minimise student debt.

1.    The following are significant and important steps students can take to reduce living costs:


  •   Sky TV is not a living essential – cancel your subscription
  •   Drinking is expensive, especially buying drinks at the pub. Decrease your drinking habit - you won’t   miss the hangovers!
  •  Don’t opt for a monthly cell phone plan, go prepay. That way you can better control your spending. I once had a $350 cell phone bill when I was a student – it took a while to pay it off…
  • Save money during the summer break and use some of it to pay either your course related costs or fees. 
  • Consider studying at a place where it’s cheap to live – Palmerston North is a good example, or living with your parents while studying if possible.

2.    Avoid getting the course related costs loan if possible. A number of people I know from university used course related costs for new clothes, alcohol, ipods etc. Don’t fall into that trap. It isn’t a free $1000. You will have to pay it back eventually.

3.    Choose a degree that will lead to a job. As an example, an Art History major may be interesting, but chances of getting your dream job as an art critic or in a famous gallery are pretty slim. If you have a degree but end up working in a job you could have got without it, you have to consider if it is worth the cost. A good point to remember is that universities want your business – so even though a course page may list possible areas of work, that doesn’t mean it will be easy getting work in those areas.

4.    Free money – Look into scholarships. They don’t always look at your academic achievement - there are scholarships that take into account your region, needs, academic abilities, historical events, future plans and subject areas. Check out StudyLink for info on their two scholarships the Bonded Merit Scholarship and the Step Up Scholarship. University websites also have information on scholarships. Another good place for info is the Careers website

Being a wise student means you’ll be better of financially when you finish your degree and enter the work force. While the current generation want it all now, a few years down the track you’ll be thankful if you resist.  

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