So student loan debt wiped out for millions of borrowers who have already dropped out of school, but what if you’re just going to college? Should you take a loan?
Today, nearly half of all American adults attending college say they left school with debt to repay. That shouldn’t come as a surprise considering the average annual cost of college is over $35,000. But although it may seem like the cost of college can only be covered with student loans, taking out a loan should be a last resort.
Even with student loan forgiveness now a reality for many, there are no guarantees about what this means for the rest of federal student loans, or what will happen in the future. And even though more relief is on the horizon, no relief is expected for those holding $131 billion in private student loans.
If you’re headed to college, you don’t need to end up with a mountain of student loan debt. In fact, here’s how to pay for college without debt.
How to Pay for College Without Debt Start saving early with a 529. Fill out the FAFSA. Choose an affordable school. Talked to college. Consider community college first. Earn college credit in high school. Apply for scholarship. Apply for state grants. Apply for a private grant. Get tuition assistance from your employer. Work your way through school. Live off campus. Use military teaching aids. Finish college in four years (or less). 1. Start Saving Early
A 529 college savings plan is a type of tax-advantaged investment account. These accounts include tax benefits and other types of incentives to make it easier to save for a college degree or other type of higher education. The schemes are administered either by the state or by an educational institution.
The main advantage of 529 savings plans is that the income is not subject to federal tax, and they are usually not subject to state tax when they are used to qualify educational expenses.
2. Fill out the FAFSA
The next step is to fill out your FAFSA — also known as the Free Application for Federal Student Aid. Even if you’re worried that you won’t qualify for financial aid, filling out a FAFSA is a relatively painless process, and most of the time if you want to qualify for financial aid of any kind. Schools require it.
This means that filling out a FAFSA, even if you don’t take out a loan, can help you qualify for scholarships and work-study. Importantly, to qualify for Pell Grant, which you don’t have to pay back, you must also fill out a FAFSA.
3. Choose an Affordable School
When evaluating where to go to school, consider how much value you are actually getting from each institution. In many cases, the more affordable option is the smarter option.
Often, small, state-run schools can save you thousands of dollars in tuition compared to large private schools or large public universities. Many institutions offer low tuition prices for in-state residents. This can be a great way to find “bargains” when it comes to schooling.
4. Interaction with the College
If you’ve found a school you like, don’t be afraid to negotiate. Many institutions offer grants or tutoring programs for low-income college students or students from diverse backgrounds. They can also direct you to more resources.
And if you’re applying to multiple schools, compare the offers for each and ask the financial aid office at the school of your choice if they can match the free financial aid offered by another school. Instead of presenting an ultimatum (which may backfire), contact the school about why you want to choose their institution but are tempted by the low price tag.
5. Consider Community College First
If you live somewhere with a community college nearby, consider attending this school first. Many universities and colleges will accept credit from these institutions, and community colleges tend to have lower costs of attendance. Plus, you can save even more money by staying at home.
6. Earn College Credit in High School
If you’re still in high school, you may be able to take a leap to college before you can move on to a university. Many high schools offer special programs to help you earn college credit while attending high school. Sometimes these programs will allow you to go to a community college for courses. You may also have heard of advanced placement courses, which allow you to take high-level classes and earn college credit for them.
7. Apply for Scholarship
Always, always, always apply for scholarships. In many cases, scholarships go unclaimed simply because people do not apply.
Some scholarships are need-based, and others are merit-based. Need-based scholarships examine things like your income, educational background, and diversity. On the other hand, merit-based scholarships look at your GPA and other achievements to determine your eligibility.
It may sound like a lot of work, but scholarships can help offset your college costs.
8. Apply for State Grants
Many states offer public grants that do not have to be repaid. These grants can go towards your education expenses. Unlike scholarships, which can come from private groups, many states sponsor grants for students who meet specific qualifications. Often, students must demonstrate a financial need and enroll at least half the time.
9. Apply for Private Grants
Similarly state and public grants are private grants. There are many organizations out there that provide assistance to aspiring students. Contact your financial aid office and community groups in your area to learn more about private grants and to locate grants for which you are eligible.
10. Get Tuition Assistance From Your Employer
Not everyone takes the traditional route in college. Many people change careers or simply want to increase their value in their organization. One way you can go to college, and save money, is to get tuition assistance from your employer.
Today, more and more companies offer tuition assistance as part of their employee benefits packages. These programs usually require you to stay with the company for a certain period of time after graduation, but they can be a great way to work and earn an MBA, for example.
11. Work Your Way Through School
We’re not going to claim that you can pay for college without debt by just doing a part-time job. But getting a job in school can help you cover tuition. One way to do this is through work-study programs, which allow you to offset your educational expenses with part-time work. Typically, these programs have minimum hours, and to qualify for them, you must complete your FAFSA. These jobs are often in high demand, so apply early!
If a work-study doesn’t suit you, consider a side hustle. Don’t forget to help your money grow; Consider investing in low-risk options such as certificates of deposit or high-yield savings accounts.
12. Live Off Campus
One of the biggest costs you will face is the cost of housing, so living off campus is an easy way to save money. If you live close enough, you can always stay at home too.
Living off campus will mean you can split expenses with roommates and save a huge amount of money compared to expensive dorm rooms.
13. Use Military Tuition Aid
If you are currently enlisted, consider using the Military Learning Assistance Program. All four service branches of the United States Army and the US Coast Guard provide financial assistance to their service members. Members of the National Guard and Reserve Components may also qualify.
Finally, the Department of Veterans Affairs offers a number of benefit programs for veterans. Both these options are great options for servicemen and women.
14. Finish College in Four Years (Or Less)
Finally, complete your schooling in four years or less, if possible! Failing classes, retaking others, and spending more time in school all mean you’ll end up spending more money. One of the best ways to save money is to end something early. Consider taking courses during summer or winter breaks to accelerate your progress.
Even for current college students who have wiped out federal loans, there is no guarantee that future federal student loans will be forgiven. So it pays to avoid student loans for the rest of your college years.
With smart financial planning, you can reduce the amount of student loans you take out and get a financial foothold on your peers.
New York contributor Kiara Taylor specializes in financial literacy and financial technology topics. He is a Corporate Financial Analyst.
Ready to stop worrying about money?
Get the Penny Hoarder Daily