Did you know: Student debt has more than doubled over the last two decades, and 48 million U.S. borrowers owe a collective student loan debt of $1.757 trillion. Given those alarming figures, isn’t it high time that we start empowering students to steer clear of student loans during their college careers? This guide is the resource you need to avoid student loan debt altogether.
While taking out loans can be an acceptable way to finance your education, it shouldn’t be the only funding you use. Luckily, there are many financial options out there that can help you pay for most, if not all, of your college expenses without being bogged down with long-term debt. But it can take some planning. That is why we’ve created this guide with advice about what you should do long before enrolling in college, right before enrollment, while attending, and even after school is over to help you avoid the student loan debt trap. Keep reading to access this timeline and tackle student loan debt head-on — before you owe thousands of dollars for years to come.
Prioritize Your Finances As Soon As Possible
The first tip for avoiding student loan debt is about timing, and the fact is you’re never too young to start saving for your college education. The sooner you can start saving, the better. In fact, it’s best to prioritize your college savings as soon as you know you’ll be pursuing a degree. Fortunately, you have a variety of techniques to choose from to help you sock away extra money for college, and you should remember there’s no right or wrong way to go about this. Here’s a list of ways you can sneakily stash away some extra funds before the first tuition payment is due.
Create a Savings Goal . . . and Stick to It
Take the time to calculate how much you’ll likely need to pay out of pocket for college, which will help you determine how much you need to save to earn your degree debt-free. Then create a weekly or monthly goal. If you have a pre-college job, for example, one approach is to pay for college first — allocate a set amount from each paycheck that goes to college savings, and the rest can go toward other expenses.
Start Early, Save Big
Did you know that if your parents saved just $5 every day from the time you were born, you could have about $66,000 by the time you’re 18? The power of compound interest (and smart investing) makes this possible. You can’t turn back time, but you can certainly start as early as possible and take advantage of investment strategies and interest. Use the calculator here to play with the figures and see how much you can save by starting today.
Talk to Your Support System About Funds
Although some students must pay for their college educations independently, this is not always true. While 83% of parents help pay for at least a portion of their children’s education, asking other family members could be the key to escaping college debt-free. Many students don’t realize how much their family wants to support them — simply if they’re bold enough to ask. This is especially true if you have a tangible goal that earning a specific degree can help you achieve. Therefore, be transparent about your financial and academic goals, which can be a great way to gain more support.
Say No to Loans During Final Preparations
So now things are coming down to the wire and college is around the corner, which is usually when prospective students begin to panic if they haven’t finalized how they’ll finance their education. However, it’s vital to remember not to make hasty decisions regarding your education. It’s important to note that you do not have to pay for your entire college education upfront. Rather, it’s most common to pay per semester, and if you don’t have all the money now, payment plans and other options can allow you to attend college without student loans. Below are some ideas for funding your degree if you’re about a year away from college.
Consider Alternative Funding Options
There are many lesser-known methods for funding your college education; here are some top options to help you graduate from college without student loan debt.
- Crowdfunding – Raising money from people in your network can be an amazing way to fund your college education. With enough contacts and a little luck, you can post a campaign on a crowdfunding website, such as GoFundMe, and receive donations. Sometimes your campaign will even go viral, earning far more than requested.
- Tuition Exchanges & Reciprocal Agreements – A smart financial strategy may be to take advantage of a tuition exchange or reciprocity agreement, which means attending school in a nearby state. The terms and conditions depend on the agreement signed by each state, but often, students receive reduced tuition rates offered exclusively to non-resident students. Visit our guide about tuition exchanges and reciprocity agreements for more information.
- Tuition Payment Plans – Another affordable method of financing your college education without student loans is working with your school to create a tuition payment plan. These agreements allow you to break down the total cost of each semester into monthly payments spread out over the duration of your degree. The payment plans often include one larger sum and a series of smaller payments; contact your chosen college for more information.
- Work Study Programs – Lastly, work studies programs involve applying for federal grants, which are then disbursed in exchange for working at an on-campus or college-affiliated department or business. The amount you are eligible for varies based on your family’s financial status. However, the grant allows you to earn at least minimum wage and a weekly paycheck that can help pay for expenses such as books, food, transportation, supplies, and more.
Enroll in an Affordable Online Program
One decision you can make to help you earn a debt-free degree is to enroll in an affordable online program. With technology evolving and more people than ever choosing remote learning, online degrees are an economical alternative to on-campus options — and are just as legitimate as those earned via in-person instruction. Best of all, these programs allow students to avoid unnecessary costs such as commutes or relocation, meal plans, on-campus healthcare, parking, and more. Additionally, online college programs are highly flexible and allow students to learn at their own pace and around their own schedules.
Prepare for Overlooked Expenses
College is expensive on its own. However, there are often overlooked expenses that many students don’t consider until they are already enrolled in their chosen programs. For instance, students on campus must pay for meal plans or purchase food and prepare their own meals. Additionally, textbooks are expensive and often cost hundreds of dollars per semester. Depending on the curriculum and circumstances, students may also need to pay for parking, Wi-Fi, computers, printers, and more.
Study Hard and Ace College-Entrance Exams
Most colleges require some sort of entrance exam before you can register for classes. These are not only used as a method of assessing your level of education for class placement, but they also can be used to determine your eligibility for certain institutional aid, scholarships (some universities even offer full rides if you achieve a minimum score), and more. Therefore, you should take the time to study to ensure that you are fully prepared for the exam and get the best score possible.
Take Advantage of Scholarships and Grants
Many schools/organizations offer attractive scholarships, and grants can come from governments, schools, or private organizations. Here’s more about these funding options:
- Scholarships – Generally, scholarships are merit-based awards. However, they often include a financial component. So no matter if they’re based on academic success, leadership skills, GPA, exam scores, or financial need, plenty of college scholarships can allow you to pay for college without needing to incur debt.
- Grants – On the other hand, grants are typically income-based awards that are determined by various aspects of one’s socioeconomic status. Therefore, users must provide specifics that can help demonstrate their need, and eligibility is determined by a committee tasked with awarding funds.
Stay Financially Focused in College
Congratulations! Now you’re enrolled in college, and with any luck and by following the tips previously discussed, you’re here without the need to take out student loans. Now your objective is to stay debt-free until you graduate. This takes focus and discipline. In addition to the rigors of your education, now you’ll need to devote energy to properly managing your finances. Although this may seem daunting, it’s very manageable — if you create a plan and stick with it. Here is a list of tips to help you do just that.
Apply for Paid Internships
If you’re searching for ways to enhance your education and improve your financial picture, applying for paid internships is an excellent choice. Paid internships allow you to work in companies and sectors you plan to enter while providing you with stipends and/or weekly paychecks. You can find paid internship opportunities online, at your financial aid office, and from other students. You can even contact hiring managers directly to see if they are interested in taking on paid interns.
Be Credit Card Conscious
If you’re a struggling college student, credit cards can seem like a godsend to help you cover various expenses. Nevertheless, overusing your credit cards — which often come with high interest rates — can lead to crippling debt, undermining your goal of graduating college debt-free. Therefore, if you use credit cards to help cover your college-related costs, you should ensure that you set a budget and stick to it. You should also pay your credit cards off as soon as possible.
Stay Focused and Maintain Aid Requirements
Whether you have assistance in the form of financial aid, a scholarship, or grant, there are typically requirements to maintain this aid. For instance, you may have to complete a certain number of community service hours or maintain a minimum GPA. Either way, take time to write down all the requirements for your various scholarships and other types of aid and check them periodically to make sure you don’t get off task.
Stick to a Budget
As a college student, your best friend is a sound budget. This is especially true if you’re living independently and managing your finances for the first time. Therefore, you may need to create a strict budget and stick to it. If you are unsure of how much your expenses will be, try asking other students and financial aid representatives, and conduct some research online before finalizing your budget.
Take Advantage of Free Student Resources
Lastly, plenty of free student resources will allow you to boost your financial literacy, learn how to invest and pay off bills quicker, and more. As a university student, you’ll also have access to practical tools that may be free or at reduced cost because of your student status — think memberships to university gyms, tutoring offered in the career center, therapy offered by supervised counseling students, and much more. Explore these options, and take advantage of anything that will improve your life.
Debt Demolition: How to Erase Incidental Debt
No matter how well you plan, unexpected expenses are always possible. With large enough expenses, you may feel compelled to take out loans just to relieve the pressure and ensure you can continue your education. This is totally understandable, and it’s important not to panic. Even if you need to take out a student loan, it’s not the end of the world. However, you should take them seriously and do your best to repay them as quickly as possible. Here’s an overview of some strategic ways to quickly repay these loans.
Strategy One – Consolidate or Refinance Loans
Loan consolidation and refinancing are popular options to tackle debt. This involves working with a financer to move various existing loans into one lump sum, or to negotiate a lower interest rate. Most often, you’ll take out one loan that can be used to pay off the other loans, and in exchange, you receive lower monthly payments (and only have to make one payment). If you have several student loans and are worried you can’t repay them quickly enough, it may be time to consider consolidation.
Strategy Two – Explore Loan Forgiveness Programs
Another exciting financial opportunity is to research loan forgiveness programs. Although they are not available to everyone, in certain instances, you may be able to have your loan partially repaid or paid in full. For instance, you can apply for income-driven repayment forgiveness, the Perkins Loan Cancellation Program, the Public Service Forgiveness Program, the Teacher Loan Forgiveness Program, the Closed School Discharge Program, and more. Learn more about these and other loan forgiveness programs.
Strategy Three – Make Extra Payments
Another great way to repay your student loans is by making extra payments. This is because a lot of accumulated student loan debt comes from the interest being charged on loans. However, by making extra payments, you can decrease the interest you are being charged and thus repay your loan more quickly. If possible, create a budget that allows you to submit one additional payment each month — or as often as you can.
Strategy Four – Prioritize High-Interest Loans
Not all loans are created equal; some have much higher interest rates than others. For instance, private loans are known for having some of the highest interest rates of all student loans. Therefore, if you have a private loan, you may want to focus on repaying that loan before you focus on repaying other loans. For some borrowers, this may mean making minimum payments on low-interest loans while paying as much as possible on high-interest loans.
Strategy Five – Work with a Financial Advisor
Lastly, working with a financial advisor can be an excellent way to repay your student loan debt. This is because they can take inventory of your present financial situation and provide you with the best ways to eliminate your debt. You can search for free or cheap financial advisors online, join a credit union, search for those who do pro-bono work, ask questions of your favorite finance professionals via chat and private messages on social media, and more.
Online Resources to Unlock Student Savings
If you’re searching for the best ways to earn a degree debt-free, the tips and tools within this guide are enough to get you started. Nevertheless, they’re just the tip of the iceberg. If you’re serious about earning a debt-free college degree and achieving long-lasting financial literacy, here is a list of resources to help guide your journey.
If you’re searching for the best ways to earn a degree debt-free, the tips and tools within this guide are enough to get you started. Nevertheless, they’re just the tip of the iceberg. If you’re serious about earning a debt-free college degree and achieving long-lasting financial literacy, here is a list of resources to help guide your journey.
- Afford Anything – Afford Anything is a podcast that focuses on prioritizing spending to achieve long-term financial goals. With a motto that students can afford anything but not everything, finance expert Paula Pant teaches students how to build wealth through passive income to eventually afford virtually anything they want or need.
- AFSA Education Foundation – This resource offers a free personal finance course for middle, high school, and college students called Money Skill. This program covers federal income taxes, renting or owning a home, credit, short-term/long-term savings, retirement planning, and income over the lifecycle.
- Cash Course – Cash Course is an educational website with online education courses designed to help instill financial literacy in students, school administrators, and all others. They also offer customizable financial tools, various informative articles and other educational resources, a guide to real-life money questions, and more.
- FinAid – FinAid is a fantastic resource for those who need help understanding the full cost of college and the best options to help you pay for your chosen educational path. It provides a wide variety of information on topics such as financial aid, scholarships, work studies, and other pertinent terms that can help you better understand your college funding options.
- Finra Foundation – This website features research and educational tools designed to build financial literacy. It offers tools and tips to help students learn how to manage, grow, and invest funds. It also inspires users to create more inclusive financial networks by addressing systematic wealth inequalities.
- Mint – Mint is a highly beneficial personal finance app that helps users create realistic financial goals. It helps users start/manage savings accounts, create tangible budgets, and stick to them while on the go.
- Next Gen Personal Finance – Known for being “the leading provider of financial education curriculum 100% free,” Next Gen Personal Finance offers financial advice to high school students and young adults who lack basic financial literacy. The YouTube channel has practical tips on everything from general shopping to financing college and cars — and much more.
- TruFinancials – This YouTube channel caters to young adults seeking fintech solutions. It offers in-depth financial advice on topics such as saving money and managing sudden wealth, budgeting, using credit cards/crypto, and more. This is a great channel for everyone, from those just beginning to save to those trying to build their investment portfolios.
- World of Money – World of Money is an app that aims to teach children widespread financial literacy to create more financially literate adults. It offers financial training for children ages 7-18. They also offer a separate program called the Moguls program for those ages 7-26 interested in business and savings.
- Zogo –This engaging app teaches financial literacy using fun educational games. Offering over 300 game-infused modules, users can learn at their own pace, all while using highly engaging tools that will help them retain the information. Users may also earn gift cards and checking account bonuses in exchange for completing the various modules.
