6 Steps to Reducing Your Student Loan Costs

A little research and scrimping now saves big bucks for graduate students.

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If you can't get enough grants or scholarships, and have done all you can to reduce your costs, it may be a wise move to borrow—in moderation and carefully—for your graduate education. Studies show that graduate degrees often help boost career and earnings options. Still, because the economy is unpredictable, it's prudent to try to limit your debt. Here are some tips to reduce your graduate school debts.

 1. Borrow as little as possible. Keep living expenses as low as possible and try not to borrow to fund them. Remember the old saying: If you live like a lawyer when you're a law student, you'll have to live like a law student when you're a lawyer.

 2. Check out your future salary, and the earnings records of the graduates of your school, to see how much you can reasonably afford to put toward debt payments when you finish school. Use a loan repayment calculator to estimate how much that means you can afford to borrow now. If there's a good chance your payments will leave you with very little to live on, or put your debt to income ratio out of whack, rethink your plans by looking for less expensive schools or better financial aid.

 [Read How to pinch pennies in college.]

 3. Look for loans with the lowest interest rates and fees available. Check with your school or charities to see if you qualify for a loan charging no interest at all.

 4. Fill out the Free Application for Federal Student Aid to qualify for low-cost federal student loans. Do this before charging tuition on your credit card or signing up for a private loan.

 [Read How to avoid common FAFSA mistakes.]

 5. Investigate the growing number of loan repayment or forgiveness programs offered by selected graduate schools, employers and professional organizations. While Loan Repayment Assistance Programs, or LRAPs, are fairly common for lawyers doing public service work, there are a growing number for medical professionals, policy grad students, and even M.B.A.'s.

 6. Consolidate your federal student loans with the federal government after leaving grad school and apply for Income-Based Repayment. This new program allows debtors to cap monthly payments below 15 percent of their income. Debtors who work in public service and make 120 on-time payments can discharge their remaining debts for free. Those who keep making payments for 25 years can have their remaining debts forgiven no matter what their jobs.

 [Read The 4 best federal grad student loans.]