How to Earn a Debt-Free Degree
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College costs are rising, and financial aid hasn't kept up for many Americans. This has led to more students going into debt to pay for college. The total student loan debt in the U.S. was roughly $1.75 trillion in March 2022, according to the Federal Reserve.
A college degree is associated with higher earnings, but the prospect of saddling yourself with thousands of dollars in student debt may be discouraging. Read on to find out how to get a debt-free degree.
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Cons of Student Loans
The importance of graduating debt-free and the disadvantages of student loans are clear. Students who take out college loans must spend their future salaries on loan repayments instead of saving money, and they face the consequences of fees or bad credit ratings if they can't repay their student loans.
Debt's impact on a recent graduate should not be understated: The financial pressures of loan payments can influence where students live and work.
More than 30% of millennials in a 2021 BestColleges survey said they couldn't buy a house because of their student loan payments. And almost 20% said they couldn't afford to change careers or get a new job.
If graduates don't pay their student loans, their loans can go into default, deteriorating their credit and ability to take out loans. Not paying student loans can also lead to forced repayment through garnished wages and withholding of tax refunds, weakening your financial future for years to come.
17 Ways to Go to College Debt-Free
Although applying for scholarships and grants and working during school can be exhausting, reducing your student debt can be hugely beneficial in the long run. Earning a debt-free bachelor's degree can give you much more freedom and flexibility in your personal and professional life after graduation.
1. Attend a Public School as an In-State Student
In-state schools' tuition prices tend to be much lower than tuition at private schools and out-of-state public schools. According to the National Center for Education Statistics (NCES), the average in-state tuition at a public four-year school was $9,349 for the 2019-20 school year — $23,420 less than at private four-year schools and $17,674 less than out-of-state public schools.
2. Attend Community College
Earning an associate degree in two years at a community college and then transferring to a university could save students tens of thousands of dollars. Two-year schools are significantly less expensive, and they allow students to complete many general education requirements. The average tuition at public two-year schools in 2019-20 was $3,377, according to NCES.
3. Attend Online College
Attending college online might save you some money if you choose an affordable online program. Some schools or programs also waive out-of-state tuition fees.
Online tuition might also be cheaper than attending in-person classes. For example, for the 2022-23 school year, online tuition at the University of Florida is $129 per credit for in-state undergraduates. In contrast, on-campus classes cost $213 per credit for Florida residents.
4. Attend a No-Loan College
"No-loan" colleges provide opportunities for students who meet certain financial aid criteria, such as being eligible for Federal Pell Grants. These colleges work with students to help them address funding gaps, ensuring that learners don't need to take out student loans. Some no-loan programs require students to contribute to their tuition by working part time.
5. Save With a 529 Plan
529 plans provide financial savings opportunities to help people set aside future tuition money. There are two types of 529 plans: prepaid tuition plans and college savings plans. Every state supports at least one of these options.
6. Earn Scholarships
Scholarships help students pay for college. They can be awarded to students for many reasons. Many are awarded based on your academic profile, although some awards target students from certain demographic backgrounds, such as scholarships for LGBTQ+ students.
Many scholarship applications require an essay, letters of recommendation, and financial aid information. Applying for scholarships can be a lengthy process, and you should approach it with the same seriousness as applying to colleges or jobs. Receiving a scholarship can reduce or eliminate your dependence on loans.
7. Earn Grants
College grants provide students with need-based funding. While scholarships are often awarded based on merit, grants are doled out as needed to students for a specific purpose. Some grants, such as the TEACH Grant, require students to complete certain classes, maintain a predetermined level of academic achievement, and hold a specific job. If a borrower does not meet these conditions, the grant may turn into a loan.
Many grants are offered on a first-come, first-serve basis. Grants may be awarded by private organizations, as well as the federal government. To qualify for federal grants, students need to fill out the Free Application for Federal Student Aid (FAFSA).
8. Participate in a Work-Study Program
Work-study jobs are offered through a federally funded program. This program helps students earn financial funding through part-time work at their college. All students with demonstrable financial need are eligible. The various work-study offerings provide opportunities for students to develop relevant professional experience while limiting their debt.
Check with your school's financial aid office to see if your school offers work-study positions and how you can apply. Often, schools offer work-study jobs alongside campus employment opportunities. Outside organizations may also have agreements with your school to offer work-study jobs.
9. Work Through College
You don't have to participate in a work-study program to earn money for college. Attending school part time while working to pay tuition in full can save you money in the long run. There are disadvantages to this, such as potentially taking longer to graduate. Also, working while attending college can be stressful, so this option may not be for everyone.
10. Get Your Employer to Pay
If you're already employed, your company might participate in an employer-sponsored tuition program, where they either reimburse tuition or help pay off your student loans.
Employers with a tuition reimbursement program pay for some or all of an employee's tuition for relevant coursework or training. Depending on the company, part-time and full-time employees may be eligible to apply. Most companies require workers to apply to the tuition reimbursement program before being accepted into their program of study and after they have worked with the company for a certain amount of time.
11. Join the Military
The federal government, along with many nonprofit organizations, helps military members and veterans afford college. Military members and their families can pursue many military scholarships, grants, and federal student loans specifically intended for them.
The Post-9/11 G.I. Bill also allows military service members to use or transfer unused education benefits to immediate family members. Service members must have at least six years of service and commit to an additional four years of service to transfer benefits to a spouse or child.
12. Take Prior Learning Assessments
Prior learning assessments (PLAs) allow students to earn college credit for previously completed education, training, or experiences. For example, students can earn credit for successfully passing Advanced Placement (AP) exams. At many high schools, the only cost associated with an AP class is the $92 exam fee, which may be waived for students who demonstrate financial need.
13. Attend a Dual-Enrollment Program
Dual-enrollment programs allow high school students to take college-level courses for credit. Many students who join these programs attend classes at their local community college alongside their high school courses.
Ask your high school counselor if any colleges offer dual-enrollment programs in partnership with your school. Students in these programs often pay less than half the cost of tuition for their college classes, and some pay no fee at all. After graduating from high school, students can transfer their credits to expedite their college graduation timeline.
14. Become a Resident Advisor
To save money on housing and food, students can become a resident advisor (RA) at their college. This part-time job often comes with free housing and a college meal plan.
At most colleges, RAs live with other students. They plan activities in their dorm, fostering a fun and welcoming environment. The job isn't for everyone, but many who work as an RA find it a productive way to save money while gaining work and leadership experience. Most RA applications at colleges are competitive and require students to apply up to a year in advance.
15. Take More Credits Than the Typical Student
Students who are good at balancing a large academic workload can consider adding an extra class or two each term, signing up for more than the typical 15-credit semester. For instance, at the University of Virginia, students can request permission to take 17-21 credits per semester. If students consistently overload their schedules, they might be able to graduate in three years instead of four, saving money on room and board and getting to work faster.
16. Rent Your Textbooks
Tuition isn't the only expensive part of school. The cost of textbooks can really add up. You can save money on textbooks by renting textbooks, buying e-textbooks, or borrowing them from classmates.
17. Live on a Budget
Budgeting in college teaches students to manage their finances. Students can track their major daily expenses (such as food and transportation) and stay abreast of their overall finances. Take advantage of student discounts and coupons, and identify restaurants and stores that offer good deals.
Budgeting isn't always easy, but it can help you find fun, creative ways to spend your free time and get to know your surroundings. Below are some tips and tricks for budgeting in college:
- Paying with cash forces you to be more conscious of how much you're spending, unlike paying with credit cards.
- Car expenses — insurance, tune-ups, oil changes, parking fees, and gas — add up quickly and can eat away at your budget. If it's practical for your situation, take public transportation, bike, or walk.
- Take advantage of student discounts. Many museums, theaters, sports venues, and athletic centers offer discounts to students. Bring your student identification card with you and save money on entertainment.
- Find an affordable housing situation. Finding a roommate and splitting the cost of rent, utilities, and internet can greatly reduce housing costs.
Student Loans Aren't Always Bad
Even with strict budgeting, scholarships, and part-time jobs, you may still need to take out a loan. But that need not be the end of the world. As long as you've done your best to limit the amount of money you need to borrow, you'll have significantly less to repay after college. The key is to avoid getting saddled with too much debt that will take years and years to pay off.
Before starting college, it is important to determine how much debt you can afford to take on. One common guideline to follow is that your total debt upon graduation should be less than your annual starting salary. If you have to borrow more money to finance your education at a certain college, it might be time to consider looking into different schools.
DISCLAIMER: The information provided on this website does not, and is not intended to, constitute professional financial advice; instead, all information, content, and materials available on this site are for general informational purposes only. Readers of this website should contact a professional advisor before making decisions about financial issues.