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The Basics

11 ways to graduate with less debt

Whether you're already in college or looking ahead, there are steps you can take now to lighten the load when you finish college.

By Lynn O'Shaughnessy

Students blame spiraling college costs as the No. 1 culprit for their debt. But knowing this won't provide you with much consolation if ramen is all you can afford to eat as you whittle down your student loan and credit card bills. Whether you're in college or haven't started yet, there are ways to shrink your debt or avoid it entirely.

Here are some tips to get you started:

Control your costs

1. Stick to a four-year plan. According to UCLA's Higher Education Research Institute, only 28% of students at public universities graduate in four years. When college classes drag past the traditional eight semesters, debt piles up.

The rates vary wildly: 71% of students at the University of North Carolina at Chapel Hill exit on time, but only 46% of undergrads at the University of Wisconsin-Madison do. At San Diego State University, less than 20% of students graduate in four years.

College administrators tend to blame students for dawdling, but low graduation rates also can mean students can't register for the classes they need because of overcrowding. If you're interested in schools with pitiful grad rates, ask the school how some students manage to beat the odds. Avoiding universities with lousy graduation rates will be far more beneficial than working extra shifts at Baskin-Robbins.

You can find schools with higher four-year grad rates at College Results Online. Also see "The 50 best values in public colleges" and "The best values in private colleges."

2. Get a campus job that really pays. At most colleges, it's still not too tough to find a campus job. If you want a job that can seriously boost your chances of graduating debt-free, however, consider applying to be a resident assistant. Many RAs get their room and board free, which at plenty of schools can outstrip tuition costs. At UCLA, for instance, the tuition and fees for 2009-10 are about $8,300, but room and board is the biggest-ticket item, about $13,300. With the recession hitting universities, ask about the availability of campus jobs when evaluating schools.

Video: Who's giving millions to colleges?

3. Get responsible now! Start showing some restraint on what you buy, and give budgeting a whirl. "Most teenagers today have been given a lot by their parents, and now is the time to get realistic about what it's like to manage their own money," says Gerri Detweiler, the credit adviser at, a personal finance Web site.

Use credit wisely

If you're a college student, it's going to become a lot harder to party with plastic.

Beginning on Feb. 22, 2010, credit card issuers won't be able to give consumers younger than 21 a card unless a parent, guardian or spouse co-signs the application. The only way that young college students can dodge this crackdown is if they provide proof that they have the financial means to repay their debt.

And that's not the only restriction. Full-time college students will have access only to credit that doesn't exceed $500 or 20% of their income each year. (See "Under 21? No credit card for you.")

While this may not seem fair, Congress is trying to protect students from making bad credit decisions on campus quadrangles across the country. For years, card issuers have paid universities millions of dollars for the right to ply their students with free gifts, says Daniel Ray, the editor-in-chief of

One result: More than half of current college students have at least four credit cards, according to a recent study by student lender Sallie Mae. A typical student carries a balance of nearly $3,200; by graduation, one out of five card-carrying students owes more than $7,000. That's no way to start a career.

Continued: Max out federal loans first

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