With many tuition bills coming due this week, student loan applications are pouring in to lender websites. With nearly three-quarters of college students graduating in debt, many families consider student loans to be a given part of the college financing process. A necessary evil. And while a minimal amount of college debt, borrowed responsibly, can be a worthy investment in a student’s future, borrowing for that college degree is not always a wise decision. (And unchecked borrowing almost never is.) Believe it or not, it is, in fact, possible to get through college with little or no debt (and no, not just for the filthy rich). Here are ten ways to pay for college without student loans:
- Savings: It probably goes without saying, but how could I not start here? A parent who saves a mere $50 per month from the birth of their child will likely have around $20,000 available to pay for college—about a year of public college covered! Wait until your child is in high school to start saving? It’s still do-able, but you’d need to up your saving to about $400 per month. Wherever you are in the process, start saving today—as much as you can—and let interest work for you, rather than against you as it does with a loan. And think saving is only the parents’ responsibility? Nope. Students working part-time and over the summer can also contribute to the college fund.
- Payment Plans: Most colleges now offer families the option of paying on a monthly installment plan, rather than in a lump sum. Stretching out payments over the course of the year can make paying without loans a lot more feasible, and most payment plans’ enrollment fees are minimal compared with interest payments on a 10-year loan. And again, remember that paying for college is a whole lot easier when it is a team effort. A student working part-time can budget some of his monthly paycheck to paying the tuition bill, as can his parents.
- Need-based Grants: While completing a FAFSA does allow a student to tap into the government student loan programs, it also opens up the possibility of receiving need-based grants, from the federal and state governments, as well as from the colleges themselves. Apply for financial aid to ensure you’re not passing up any free money.
- Recruitment Scholarships: Want to maximize your chances of receiving a large discount on the price of college? Apply to some colleges where you are overqualified from an admissions perspective. Colleges use scholarship funding to recruit the students who stand out the most in their applicant pool. Apply to colleges where you are well above average academically, and you will likely be rewarded handsomely with scholarship funding.
- Private Scholarships: Also don’t ignore the thousands of scholarships available from private organizations. Be focused in your searches to cut down on the competition.
- Advanced High School Courses: Many high schools offer students the option of taking college-level coursework in high school, either for free or very inexpensively, through an Advanced Placement (AP) curriculum or through a local community college. Get enough college credits out of the way in high school, and you may be able to graduate a semester—or even a year!—early, completely eliminating a tuition bill or two. This may allow you stretch out your savings enough to avoid or minimize borrowing.
- Community College: And speaking of community college, undertaking your first couple of years of college at the local community college can save you big bucks, and can make the possibility of getting through school without loans a much more realistic enterprise. And did I mention the cost savings of living at home as opposed to on campus? Thousands! Just make sure you’re working with an academic advisor at the community college from day one to ensure that your credits with transfer to the four-year school without issue.
- Public College: Many students have their sights set on private colleges, but the price tags on those private schools often necessitate heavy borrowing on the part of students, parents, or both! Public colleges can offer a great bang for the buck in terms of educational value. Always pictured your college years on the quad of a small, private college though? Consider a public honors college, which can provide that small-school feel in the midst of a large research university. Out-of-state public colleges can also become financial feasible with the help of a regional tuition reciprocity agreement, like the New England Regional, the Academic Common Market, the Midwest Student Exchange, or the Western Undergraduate Exchange.
- Employer Assistance: Employers can be another lucrative source of education funding. Parents’ employers may offer scholarships for dependents of employees. And, if a student is willing to work while attending college part-time, many employers offer generous tuition reimbursement programs that will foot a large chunk of the college bill.
- Tax Breaks: And speaking of tuition reimbursement, education tax breaks can help reimburse you for a portion of your college costs paid. The most generous college tax break, the American Opportunity Credit, can reimburse up to $2,500 of your or your child’s tuition. Though lacking the glamour of a scholarship, a tax credit is another source of free money that can help bring the possibility of paying for college out-of-pocket within reach, so make sure you take advantage.
Paying for college is, undeniably, a challenge. Most families must attack the college bill from a number of different financial angles. Student loans are an effective weapon to hold in your college payment arsenal, but I encourage families to think carefully about whether, and how much, they truly need to utilize loans in order to finance that college degree. Loans are a costly weapon to wield, so make sure you explore the above strategies before taking on debt, as, believe it or not, it is possible to conquer the college bill without student loans. It may involve compromise, and certainly some sacrifice, but so does repaying loans. As a family, you must decide where, when, and how much you are willing to sacrifice to get that degree in hand.