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31 Ways to Reduce or Avoid Overwhelming College Student Loan Debt

Student loan debt in the United States rises six times faster than the economy at large, with the average student borrower’s debt clocking in at nearly $40,000, according to EducationData.org.

If you want to dodge that bullet, look to the ounce of prevention over the pound of cure. Try the following education strategies before you enroll, during your college years, and after earning your college degree to reduce or avoid student loan debt entirely.

Reducing Student Debt Before You Apply

Laying the groundwork for low education expenses starts in high school before you even apply to universities. Set yourself up for success from the very beginning.

1. Earn Stellar Grades

Better students receive better student financial aid you don’t have to pay back, such as scholarships and grants.

That starts with earning a high grade point average throughout high school. If your grades start flagging, enlist the aid of a tutor and talk to your teachers about possible extra-credit assignments.

It also means preparing for the SAT or ACT to get the highest score possible, potentially even taking the tests several times.

While universities are starting to deemphasize standardized test scores, many still take them into account. Even among those who don’t consider them in admissions, most still include them in scholarship applications.

2. Take AP- or IB-Level High School Courses

Many high schools offer advanced placement (AP) or International Baccalaureate (IB) courses that allow students to earn college credit for taking the course. These are usually available to high school juniors and seniors.

While more academically demanding than standard high school classes, they can help you avoid classes in college. A student who takes a few AP or IB courses per year can easily shave a year off their college attendance, which makes these courses worth thousands of dollars in college savings.

To qualify, a student must typically earn a high grade (A or B), receive a written letter of endorsement from a teacher, and do well on the exam. Qualification requirements vary by school and program.

3. Start Hunting for Scholarships and Grants Early

Many organizations, such as nonprofit volunteer clubs, religious organizations, and civic groups, offer scholarships to outstanding students or students who meet specific criteria. Start with a simple Internet search, and use websites like Scholly and Scholarships.com.

And speak with your high school guidance counselor, as they can often point you toward unique scholarships. You can also check with your bank or credit union, your parents’ employers, and organizations dedicated to the field or industry you’re interested in studying.

If you excel at a sport, you might land an athletic scholarship. The same goes for music, art, and theater. For example, a track-and-field coach recruited my brother for his pole vaulting. The college also gave him an art scholarship because of his gift with a paintbrush. The two scholarships combined put a deep dent in his tuition costs.

4. Work and Save Money for College

The earlier you start setting aside money for college, the more you can save — and the more it can compound on itself when invested well. Start exploring part-time jobs after school and on the weekends and full-time work during your summer breaks.

Generally, the age minimums for jobs like delivering newspapers, babysitting, doing chores in a private home, or working for your family’s business (as long as it’s not doing something hazardous) are lower than the standard state minimums for other jobs.

Once you get a part-time gig, determine how much of each paycheck will go toward college savings and how much you’ll keep for your expenses, such as the cost of getting to and from work, and entertainment. By saving more, your money can work harder for you in the form of compound interest.

Think carefully about where you stash your college savings. You have several account options, each with its own benefits and drawbacks:

Coverdell Education Savings Account (ESA)

Any money you deposit into a Coverdell ESA is after tax, meaning you don’t get to deduct the amount from your annual tax return. But when it’s time to pay for college, you don’t pay additional taxes.

The downside is that your contributions are limited to $2,000 per beneficiary per year. You must also use money in an ESA to pay for qualified education expenses, such as tuition and room and board.

529 College Savings Plan

Operated at the state level, 529 plans vary widely and can make it harder to attend college in another state. They offer tax advantages, such as no federal tax on earnings and state income tax deductions.

The contribution limit depends on the plan, but it’s usually higher than the Coverdell ESA’s $2,000. You must use the money to cover the cost of tuition and other school-related expenses, such as supplies and equipment, books, and computer software.

Standard Savings Account

While using a standard savings account from an online bank like Varo means missing out on the tax advantages of a Coverdell ESA or 529 plan, you aren’t limited to using your money to pay for school. That’s a plus if you change your mind about going to college.

Savings accounts don’t always have the best rate of return, but since they’re federally insured, they’re a low-risk way to save for school.

Roth IRA

While Roth IRAs are retirement accounts, there’s a loophole that lets you withdraw from your Roth IRA during school as long as you don’t exceed your higher education expenses for the year. You can also withdraw contributions tax- and penalty-free, although you lose out on future compounding.

You can open Roth IRAs with most online brokers, like M1 Finance.


Reducing Student Debt When Choosing and Applying to Colleges

You could apply to schools because their brochures are glossy or their quads are pretty — and empty your pockets accordingly.

Alternatively, you can get strategic with your choice of colleges. As someone who has hired many people over the years, I can assure you employers only give your college name a second thought if it’s an Ivy.

So unless you have the grades, scores, and sheer admissions luck to attend an Ivy League school, break out your abacus and start planning for the most affordable way to earn the degree you want.

5. Attend a Free College

Yes, you read that right: Some colleges in the U.S. are completely free. You only pay room and board plus living expenses — tuition and fees are covered by the college.

College Consensus has a list of 35 tuition-free colleges. Most have an estimated tuition value of $15,000 to $35,000, and the acceptance rates range from as high as 40% to as low as 7%.

Some of these colleges, such as College of the Ozarks, require students to work on campus for several hours per week. Several are liberal arts colleges, but many have a specific focus, such as engineering or music.

6. Attend a Community College First

Many recent high school graduates are eager to attend a four-year university, but attending community college can save you thousands of dollars per semester.

Community college classrooms are also much smaller than large university lecture halls and can provide you with more personal attention when taking your prerequisite classes.

After a year or two of racking up credits, you can transfer to the university you want to graduate from. Your resume will show your graduating college, not the community college, so employers will never know you “hacked” your education costs.

Just make sure all the credits you’ve earned fully transfer from the community college to the college you want to attend to avoid wasting time and money on useless classes.

In addition to far cheaper tuition, you can also save on room and board by living with your parents.

7. Attend an Online University

While it’s too early for official data, anecdotal evidence suggests that online education went mainstream in the wake of the coronavirus pandemic. If you don’t mind living at home with Mom and Dad for a few more years, look into an online university.

You can also use online college as a modern variation on the community-college-to-university path and go for a year or two before transferring your credits to a traditional four-year university. Again, do your homework first by verifying your destination college accepts all your online class credits.

8. Apply for the Honors Program

If you have a strong academic record and high ACT or SAT scores, apply to college honors programs. I attended the honors program at a state university, and they included both a tuition discount and preferential treatment for housing and course placements. Some community colleges go so far as paying all your tuition, fees, and books.

Requirements vary from school to school. Beyond high test scores and a high GPA, they may require an interview, essay, or other extra labor when applying. Expect these programs to be competitive — a strong GPA alone doesn’t guarantee admission.

9. Apply to a Few Prestigious Universities Too

While it seems counterintuitive, often more expensive and prestigious colleges have more funds available from wealthy donors. Their deeper pockets and larger endowment mean more aid, such as grants and scholarships.

You can’t count on scholarship offers, as more prestigious schools get more applications, but don’t write them off just because the base tuition rate is outrageous.

10. Look Abroad

My wife is a college counselor at American schools overseas and helps her high-achieving students get accepted to colleges in the United States and prestigious schools worldwide.

She often directs her best students away from U.S. colleges, given their outrageous price tags.

Start by researching universities in the Netherlands as a particularly high return-on-investment option. Their university system is outstanding and a steal compared to American tuitions, but expect stiff competition as a result. And yes, many operate entirely in English.

11. Fill Out Your FAFSA as Soon as Possible

Even if you think you or your parents earn too much money to qualify for need-based financial aid, it doesn’t hurt to fill out the Free Application for Federal Student Aid (FAFSA).

You can complete the application before you’ve decided which school to attend. In fact, completing it before you make your decision helps you weigh the aid different schools offer.

You submit your FAFSA application online through the government’s Federal Student Aid website. Enrollment opens on Oct. 1 each year and closes at midnight on June 30.

Word to the wise: Submit yours as close to Oct. 1 as possible. According to College Ave, students who submit within the first three months of the acceptance period get twice as many grant offers.

A few days or weeks after you submit your FAFSA, you receive what’s called a student aid report (SAR). Your SAR informs you whether you qualify for a federal grant, such as the Pell Grant, or if you qualify for work-study and other federal aid programs. It doesn’t tell you the actual amount of aid you’re eligible for, as the school determines that.

Some schools have more funding than others, and that funding is often limited. The sooner you file your FAFSA, the sooner the schools you apply to are able to tell you which type of aid package you qualify for.

If you wait too long to file, all the grants and work-study funding available at your top-choice schools may no longer be available.

12. Take College Courses in High School

While attending high school, you can simultaneously take a college course or two.

Community colleges offer these during the school year or summer break and don’t typically require a high school diploma to attend. You increasingly have online options in addition to traditional in-person classes. It can be a suitable option for students who don’t qualify for AP courses at their high school but still want to get a jump-start on their college education.

By taking a class or two at a community college during two high school semesters, you can eliminate a semester’s worth of general education requirements. That can translate to saving thousands of dollars on tuition.

Again, make sure the credits transfer before going through the hassle.

13. Negotiate Tuition

Everything in life is negotiable, including college tuition.

If your first-choice college doesn’t offer the scholarship or aid you want, call their admissions office. Explain your predicament: You received a better financial aid offer from another school, but you would prefer to attend theirs. You may need to speak to several people in the office before reaching a decision-maker.

Don’t be afraid to put other cards on the table, such as work-study programs, student ambassador programs, or volunteer duties. You never know what the school wants (other than money) until you ask.

The worst they can say is no.


Reducing Student Debt While You’re in School

You’ve chosen your college carefully, and you’ve gotten grants, scholarships, and other patchwork sources of funding. How do you continue avoiding student loans?

14. Keep Filing Your FAFSA Applications Early Each Year

The FAFSA isn’t a one-and-done deal. You need to file one for every school year reflecting your (or your parents’) current income and financial status.

File it early each year to qualify for the best financial aid packages. Schools often run out of money for aid packages midway through the year.

Note that schools don’t look at your or your parents’ retirement accounts, such as IRAs and 401(k)s, when evaluating your FAFSA application. They also don’t look at home equity, so these financial assets are invisible from financial aid offices.

15. Join ROTC

Every branch of America’s armed forces offers a version of the Reserve Officer Training Corps (ROTC) scholarship program.

You apply for it before or during your college experience, and the earlier you do, the more potential tuition they cover. In many cases, they cover full tuition for four years plus book costs, plus housing costs (up to a limit that varies by branch).

During your college years, the military requires a certain number of days’ training each year. Upon graduation, you enter that branch of the armed service, typically as an officer. You receive additional training for a specific area of expertise, and you must serve for a minimum number of years to “repay” the military for covering your college costs.

The leadership experience and specialized training provide an excellent foundation for your future career post-military if you decide not to make a career in the service. If you do, you can expect excellent military retirement pay, among other benefits.

16. Avoid Private Student Loans

The federal student loan program limits how much you can borrow each year. You can borrow up to $5,500 per year from the federal direct subsidized loan program as an undergraduate, plus an additional $2,000 to $6,000 in unsubsidized loans per year, depending on your grade level and dependency status.

For a direct PLUS loan (available only to parents and graduate students), you can receive the maximum amount of college attendance costs minus any other financial aid you receive. The school determines that amount. See the current federally subsidized loan limits on StudentAid.gov.

Although you should minimize borrowing even with federal loans, their protection programs can offer you deferral or forbearance options if you lose your job, go back to school, or sign up for public service, such as the Peace Corps, as well as a variety of income-based repayment plans, making them preferable to private loans.

However, private student loans don’t impose these limits, making it easy to get in over your head with them. They also tend to charge higher interest rates than federal loans and infrequently offer flexible repayment plans or the option to defer your loans if you’re out of work or go back to school.

17. Plan Your Major and Path to Graduation Early

I changed my major five times in college. It was a miracle I graduated on time.

Pick a major when you first enroll and map the shortest possible path to graduation. Your major matters less than you think. Most people don’t use their major at all in their careers. A 2014 report by the Federal Reserve of New York found that only 27% of college graduates used their majors in their careers.

Unless you plan to get an advanced degree, such as medicine, law, or academia, just pick a major that interests you. I thoroughly enjoyed my psychology and criminal justice majors, but I don’t exactly use them as an entrepreneur and financial writer.

The earlier you pick your major, the more efficiently you can graduate, skipping the underwater basket-weaving classes.

18. Explore Summer- and Winter-Term Classes

I only managed to graduate on time because I took winter term classes for several years. My total number of credits far exceeded the minimum to graduate.

If you pick a major early and include winter- and summer-term classes, you can potentially graduate in three to three and a half years. That saves you money on tuition, fees, and books and gets you into the workforce up to a year earlier, earning money and advancing your career a full year ahead of your peers.

19. Get Friendly With the Financial Aid Office

Human beings are tribal animals. We look out for our own: the people we know and like.

That means you want to get cozy with the people making financial aid and scholarship decisions. The better they know and like you, the more they’ll help you. Call it a form of nepotism if you want to be cynical about it, but it’s simply human nature.

Show up periodically and ask about work opportunities. If they don’t have any at the moment, offer to intern for them for free until a paid job becomes available.

Get to know everyone in the office on a first-name basis. Ask about their children by name. Show up with coffee or doughnuts periodically. Ask about their hobbies and interests.

Do that, and you can expect the best possible aid available every year of your college experience.

20. Find a Job Where You Can Do Your Homework

The more money you earn in college, the less you have to depend on aid or student loans. And you can get clever and intentional about your work to make money while you do your homework.

I worked at my university library. I sat there mostly undisturbed in a quiet place for hours on end getting paid while doing my homework (that I had to do anyway). So working didn’t actually involve adding more work hours to my week.

My father did the same thing when he was in college, working as the night clerk at a liquor store. Few patrons came in late in the evening, so he could knock out his homework while getting paid.

Brainstorm as many ideas as possible for jobs that simply require your physical presence rather than actual labor. If you hit a wall, start asking everyone you know for ideas. Then, start asking random strangers at the dining hall until you score a job where you can do your homework.

21. Explore Cooperative Education and Tuition Reimbursement

You already know the military offers help with tuition, but they’re far from the only employer who does so.

Many employers will pay several thousand dollars of your education per year up to full tuition reimbursement. Examples include J.M. Smucker Co., Google, Bank of America, and UPS. Some even offer tuition reimbursement programs to their part-time employees.

They agree to reimburse you for a set percentage or amount of your completed schoolwork as long as you’re working a set number of hours. Some employers require you work there for a certain length of time, such as a year, before accessing this benefit.

Start with Scholly’s list of 50 companies that offer it, but don’t stop there. You can also search the Internet for “companies offering tuition reimbursement.”

Another model growing in popularity is cooperative education partnerships between local employers and colleges. They vary widely, sometimes featuring parallel working and courses on a schedule that accommodates both and sometimes alternating semesters of work and classes. In some cases, you can even earn course credits for your work.

For more details and examples, see the Cooperative Education and Internship Association.

22. Launch a Side Business

I knew a girl in college who funded her education by flipping antiques and collectibles. She and her boyfriend had experience and an eye for value and would pick up items for a fraction of their real value at yard sales and estate sales. They would then sell them on eBay or elsewhere online for a tidy profit, perhaps after some minor cleanup.

Take the same approach as if you were starting a side business while working a full-time job. Pursue business ideas that require little or no startup capital, such as an online business.

If you need some ideas to kick-start your creative process, read our article on part-time business ideas.

23. Combine Online Classes With Full- or Part-Time Work

Beyond online-only universities, most traditional colleges now offer at least some coursework online. Online courses can reduce your transportation and housing costs, but even more important, they can also give you the flexibility to work part time or full time while earning your degree.

Plus, they can help nontraditional students get a degree while taking care of their families.

Although every student learns differently, modern technology has made online learning a practical money-saving tool that can significantly reduce the costs of your degree, especially in the post-pandemic world.

24. Score Free Housing as an RA

You can always score free room (and possibly board) as a resident assistant, or RA.

These experienced students volunteer to live in first-year dorms serving as a go-to resource for newer students. They also enforce school rules, such as drug and alcohol policies.

Most of the job is passive, simply being available if someone needs help. RAs periodically have to make rounds among the local buildings, checking for violations and looking for signs of trouble. But the active duty requirements usually involve just a few hours per month.

25. Score Free Housing Through Kiddie Condo House Hacking

A more advanced technique, this one requires your parents’ help.

The premise is simple enough: You and your parents buy a house or large apartment with several bedrooms and rent out the rooms to your friends. The rent ideally covers the mortgage payment plus some maintenance costs, scoring you free housing.

When you graduate, you can either keep it as a rental property or sell it and (hopefully) walk away with a nice paycheck from the equity built over your college years.

You and your parents finance the property with a “kiddie condo” loan in which you satisfy the occupancy requirement rather than your parents. But the lender bases it on their income and assets.

For more ideas, read our article on house hacking techniques.

26. Get Creative With Textbooks

College textbooks are a scam. They’re often written by the professor, who then requires you to buy them to line their own (and the university press’s) pockets. And they tweak a few paragraphs each year to release a mandatory “new edition” to prevent you from buying used copies.

One way to save on textbooks is to buy the used prior edition anyway, knowing that the professor probably didn’t change much (if anything) for the new edition. Alternatively, you can rent textbooks through services like Campus Book Rentals, Chegg, or even Amazon.

Speaking of Amazon, they often sell or rent e-book versions of textbooks at a fraction of the glossy hardcover price.

You can also check BigWords.com to compare sale and rental prices for your textbooks across multiple platforms before buying.


Reducing Student Debt After Graduation

Even if you earn grants and scholarships and work part time during college, it’s not always possible to avoid taking out any student loans. Once you leave school, have a plan to pay off your loans and avoid defaulting.

27. Look Into Loan Forgiveness Programs

The federal loan program features numerous loan forgiveness programs, meaning you no longer have to pay your loans after a certain amount of time, provided you meet specific requirements.

Not every loan is eligible for forgiveness, and it often takes several years before you qualify. Some careers also offer student loan forgiveness.

These are some of the programs available:

Teacher Loan Forgiveness

The Teacher Loan Forgiveness Program is open to teachers who teach full time in an elementary or secondary school for at least five consecutive years.

The school you work for must serve low-income students, qualify for Title I funding, and be listed in the Annual Directory of Designated Low-Income Schools for Teacher Cancellation Benefits.

The government will forgive up to $17,500 of your loans under the program based on the subject you teach.

Teacher Loan Cancellation

If you have a Perkins loan, the government will cancel up to 100% of your loan balance if you teach in a low-income school or teach special education or a subject with a shortage of teachers (math, science, foreign languages, or bilingual education).

You must teach full time for one full academic year to qualify. The government will cancel up to 15% of your Perkins loan during your first and second years, up to 20% during your third and fourth, and up to 30% during your fifth.

Public Service Direct Loan Forgiveness

If you have a public service job (such as working at a nonprofit or government organization) for 10 years and make 120 on-time payments on your federal direct loans, the government will forgive the remaining balance on your loans under the Public Service Direct Loan Forgiveness program. Your loans must be on a qualified repayment plan.

Other Perkins Loan Cancellation Options

If you have Perkins loans and participate in certain public service activities or work in certain occupations, the government will cancel some of your loan balance for each year of service under Perkins loan cancellation programs.

For example, you can have up to 70% of your loan balance forgiven if you serve with the Peace Corps or AmeriCorps VISTA programs. Up to 100% of your loan balance can be forgiven if you work as a librarian at a Title I school or at a library that serves students from Title I schools.

Attorneys working in public-interest fields, full-time employees at Head Start programs, and full-time employees at family or child services agencies can also have up to 100% of their Perkins loans canceled.

28. Explore Employers Offering Student Loan Repayment

Look for employers in your field that offer student loan repayment as a benefit for their workers. Employers can now make tax-free contributions of up to $5,250 per year toward their employees’ student debt, so this benefit is on the rise.

Before you commit to a job, research positions at companies that provide this benefit. Start with PeopleJoy’s list or search “employers offering student loan repayment assistance.”

These programs may also include tuition assistance for continuing education, such as a graduate degree or additional classes in your field.

Even if you only work for one of these companies for a few years, you can still make a deeper dent in your student loans than you otherwise would have.

29. Form an Aggressive Repayment Plan

The federal student loan program offers various repayment plans designed to reduce some of the strain of making monthly student loan payments. Each plan differs and depends on your overall student loan debt.

A variety of income-driven repayment plans determine your minimum monthly loan payment based on your income. If you’re not earning much right out of school, it’s tempting to make the minimum monthly payments to keep them manageable in the short term. Avoid the temptation and pay back as much as you can afford, both to minimize your student loan interest and to get out from under the debt quickly.

Automate your payments to take place every single paycheck rather than every month. To become debt-free as quickly as possible, try the debt snowball strategy rather than a debt consolidation refinance if you have multiple debts.

30. Keep Living on a Student Budget

As most people earn more, they spend more. They get a raise and immediately start going out to dinner more often, move into a larger apartment, or buy a flashier car. It’s called lifestyle inflation, and it’s precisely why most Americans never build much wealth, regardless of how much they earn.

Don’t succumb to it. Keep living the broke college student lifestyle until you’ve paid off your student loans in full. Fortunately, it won’t take very long if you funnel every spare penny toward your student debts.

31. Work a Side Gig

If you want to get out of debt even faster but don’t earn a dazzling salary at your primary job, one option is to get a side gig to boost your income. It can include anything from sharing your car on Turo to delivering groceries through Instacart to selling crafts on Etsy or starting a side business.

Who knows? Your side business or job might turn into a full-time gig paying better or offering more flexibility than your current full-time job.


Final Word

According to the College Board, a public four-year college program averages $9,410 per year for in-state tuition and $23,890 for out-of-state students at a public four-year in-state school. And that says nothing of the shockingly high average of $32,410 per year for a private four-year college.

Live on a lean budget and avoid credit cards, both during your college years and after them, to minimize your student loan burden. Better yet, with proper planning in the years before and during college, you can avoid student loan debt entirely.

G. Brian Davis
G. Brian Davis is a real estate investor, personal finance writer, and travel addict mildly obsessed with FIRE. He spends nine months of the year in Abu Dhabi, and splits the rest of the year between his hometown of Baltimore and traveling the world.

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