Student Loan Debt – As of February 2023, the outstanding student loan debt in the United States amounts to $1.76 trillion. Moreover, according to a report by Forbes which says that around 92 percent of student loans fall into the federal student loans category.  That is tantamount to 43.4 million borrowers who have exceeded credit card debt and auto loans. Furthermore, California has the largest amount of student loan debt, with $149.00 billion.

Therefore, students go to various lengths to prevent falling into crushing debt and avoid going broke and the one possible way is earning an academic scholarship or merit scholarship. Hence, it can help reduce the debt burden of a student loan.

In this article, we’re going to explore how scholarships are necessary to help you avoid debt. So, let’s get started.

What is a Scholarship?

A scholarship is a form of monetary assistance provided to students by the university, government, or other non-profit organizations to access further education. Scholarships don’t always necessarily mean financial aid, as they could simply mean that a student will be exempt from paying the yearly fee.

That’s why most scholarships today are based on a few things, such as:

• The merit of a student;
• Their ability and academic criteria;
• Athletic skills and prowess;
• And financial situation.

In many cases, if a student comes from a background that earns less than $100k per year, it might make them eligible. However, it varies from state to state and depends on the grant reserved by the local government.

5 Ways Scholarships Can Reduce the Burden of Student Loan Debt

A student loan burden can affect a student’s performance and put them in debt for a significant amount of time. Scholarships are one of the best and easiest ways out of that sort of debt. So, let’s talk about the five main ways scholarships can be helpful in this regard.

Generates Another Payment Stream for College Tuition Fee

Suppose you are applying for one of the top supply chain management degree programs, which starts from $57,600. Some scholarships won’t pay every last penny you owe to a college or university. These universities offer financial aid in various chunks, and that’s why they are called partial scholarships. But, a full scholarship means all debts are paid upfront.

So, how does this work? Here’s how:

• Partial scholarships pay small loans, debts, or semester payments to your school or college.
• A full scholarship pays all the tuition fees you owe in full.

Now, this tells us that either of these scholarship types can help you generate another stream of money, which helps pay off your student loan debt. Let’s say you’re someone who can pay half the amount, then a partial scholarship would be a godsend.

Whereas for a student who cannot pay anything, a full scholarship means they can study in peace without worrying about paying a penny.

Jobs Paired with Scholarships Get Rid of Loans Quickly

As mentioned above, partial scholarships are ideal for students who can only pay a fraction of their tuition fee. But what about students who work jobs to make ends meet? In that case, it’s even more beneficial.

Now, depending on your merit, graduate degree type, and the scholarship you apply for, you might just end up getting a full scholarship. But, if you don’t, then any scholarship paired with a job can easily put the burden off your shoulders.

So, it’s important to remember that it’s possible for only 7 percent of the students to receive a scholarship. In contrast, only 0.2 percent of students receive a scholarship upwards of $25K. Here’s what this tells us:

• You shouldn’t hope or wait for a full scholarship;
• Always pair some sort of employment with scholarships.

All in all, a good scholarship paired with any sort of work/job will help you get rid of any loans you might have built up. But, as the stats suggest, don’t hope for a special scholarship type that’ll take all the burden.

Accessible Education for Underprivileged Students

A student in the United States earns around $31K a year. An accredited university now requires the student to pay around $35K per year. This means there’s no way a full-time student will be able to pay the fee all on their own.

That’s why underprivileged students can take particular advantage of such scholarships. For instance:

• They can seek out scholarships that partially pay the entire fee;
• They can apply for scholarships that pay one or two years of the fee upfront;
• Or, apply to a public university, which usually averages around $10k per year.

You pair all this with a scholarship, and you’ll go through your education smoothly.

Focus on Federal Student Loans Instead of Private

Many people suggest opting for federal loans because the interest rate is fixed and usually a lot lower than any private fund. While a good job or scholarship will rule out the necessity of getting a student loan, it can be very helpful for those who already have taken it.

Scholarships that pay for student loans are usually called grants. These grants pay off any debt you might have built up—but don’t expect any miracles. However, focusing on federal loans does give you some benefits, such as:

• You don’t need a hefty credit history;
• No need to find a co-signer;
• Way lower interest rates compared to private loans;
• Always a chance for loan forgiveness.

These factors make the federal loan a better option than most private funds. Besides that, the fixed rate, as mentioned before, is always a good thing as it doesn’t fluctuate with inflation, recessions, etc. That’s why you should always opt for a federal loan rather than a private one.

Conclusion

These are some of the ways that scholarships help you avoid the burden of student loans. It’s not an unknown thing for a student to have a difficult life in the United States—as a lot of threats loom over their studies. But, with a proper grant or scholarship, you can avoid student loan debt in the four ways mentioned in this article.

Disclaimer – The views expressed in this blog are those of a third party and do not reflect the views and opinions of the SecureMyScholarship team.