How to Avoid Debt When Dropping Out of School

How to Avoid Debt When Dropping Out of School

Considering dropping out of school? Worried about being buried in a mountain of fees? Check out these smart seven ways to avoid racking up student loan debt.

Health issues. Family problems. Failing grades. Lack of funds and financing. Disinterest. The opportunity to take on a full-time job … There are endless reasons why students dropout of college.

But no matter what the reason is for leaving college without getting a degree, there’s one thing that almost all college dropouts have in common:

The burden of paying back student loan debt.

Are you considering putting an end to your college career? Here are seven ways to avoid debt if you plan to drop out of school.

1. Follow the Repayment Schedule

No matter how much you pray, wish, or beg, your student loans will not disappear on their own. Whether you graduate or not, you have to pay them back — no ifs, ands, or buts about it.

Most lenders give students a six month grace period between the time they leave school and the day they have to start making loan payments. Most of the time they’ll give you a lengthy repayment schedule that maps out every date of every payment you have to make. Depending on how much you owe, that schedule could last for years.

No matter what you plan to do post-college, it’s best to stick to that repayment schedule. Set up auto-pay through your bank to make sure your payments happen on time every single month.

If possible, make extra payments so you can pay down the balance faster. Making even one or two extra payments a year can make a big difference and save you on interest.

2. Start Making Payments Before They Are Due

You can get ahead of those loans if you start making payments before your first payment is due.

While you’re in that six month grace period between leaving school and having to start paying back your loans, try to make a few payments. Every dollar you pay before you’re expected to can bring your balance down.

Even small payments of $20 or $50 per week can help reduce the amount of interest you’ll pay over the life of the loan.

3. See If You Qualify for Different Repayment Methods

Depending on the types of loans you have, you may qualify for a pay-as-you-earn repayment method. This caps the amount of your monthly loan payment at 10% of your income. That way, you can keep the other 90% to pay for your apartment, your car, food, and other expenses.

The pay-as-you-earn repayment method is only available for students with federal loans. If you have loans from private lenders, ask them if you qualify for a reduced interest rate or a more affordable repayment schedule. Some lenders may be willing to work with you.

4. Refinance Your Loans

Refinancing can be an attractive option, especially if you have multiple loans and prefer to make one payment per month. However, you’ll need a good credit score (usually 600 or above) to qualify for a refi.

Refinancing is a way to merge both your federal loans and private loans into one lump payment. By doing so, you may be able to get a lower interest rate and/or a shorter repayment schedule.

Keep in mind that if you refinance, you’ll no longer be eligible for pay-as-you-earn repayments, which are always a better alternative.

5. Defer Your Loans

You can sometimes defer federal student loans, though usually only for three years. And while it may seem like a good idea to put your loans off for as long as you possibly can, try to only use this as a last resort.

Why? Because deferred loans continue to accumulate interest and will end up costing you even more money in the long run.

Deferring loans is only a good option for students who have significant financial challenges. It’s a last resort option for students with no means to pay off their debt.

6. Get a Side Job

When you drop out of school, there’s only one thing to do: get a job! No matter your situation, your student loan debt needs to be paid back, and you’ll need a source of income to do that.

Ideally, your job will provide you with enough income to pay off your loans as required. If it doesn’t, you’ll need to get a second job or find a way to make extra money on the side.

Despite the struggles you had to endure in college, this is where reality really starts to sink in. When you need two jobs just to pay the bills, you quickly realize what it’s like to be an adult. But you have to do it. You simply must take care of your responsibilities and find the means to fulfill your financial obligations.

7. Don’t Drop Out!

There’s another alternative to dropping out of school and struggling to pay off your student loans: stay in school!

Dropping out of college is a big decision. And when you’re in the process of making that decision, you should definitely consider how much you owe in student loans.

The more years you’ve invested in your education, the better it is to keep at it. After all, a college degree is likely to help you land a better job. The better the job, the more money you’ll make. The more money you make, the faster you can pay off those student loans!

College is expensive. And there’s no more tremendous waste of money than paying back loans for an incomplete education. If you can — tough it out and finish school.


College can be challenging. It can be stressful. It can be costly. And while dropping out may seem like the easy way out, it won’t be easy paying back those loans, especially when you don’t have the degree to show for it.

Get a job (or two), so you can make your scheduled loan payments. Ask your lenders if they can offer you different repayment options, lower interest rates, or consolidate and refinance. If you must, defer your loans for a few years until you’re in a better financial situation.

But if it’s at all possible, the best thing you can do is stay in school. Those loans will still be there when you graduate, but at least you’ll have finished your education and earned the degree you paid for.

Author Bio:

Ryan Sundling is a Group Marketing Manager at Cardinal Group Management and works closely with Wildwood Baton Rouge to help them with their marketing efforts. He has over ten years of experience in the student housing industry.

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