How To Pay For College Without Student Loans
If you’re currently enrolled in college, planning to start college this fall, or you are approaching college age, you’re right to worry about the future of student loans. After all, college costs keep going up every year, and all the proposed “fixes” seem to deal with having debt forgiven instead of dealing with the source of the problem.
The government is busy coming up with more solutions to the college debt crisis. In fact, the Biden administration seems to be mulling over a forgiveness plan that would erase up to $10,000 in federal student loan debt per borrower. The thing is, those who are struggling to pay student loans the most tend to have a lot more than $10,000 in student debt to begin with. Not only that, but forgiveness is only expected to apply to federal student loans (and not private student loans), and income caps will limit who can qualify.
With all this in mind, wouldn’t it be great to pay for college without having to take on any student loan debt? While earning a debt-free degree may not be easy, several experts I spoke to said it’s still possible to pay for college without any loans. At the very least, the tips shared below could help you graduate while keeping student loan debt at a minimum.
Attend Community College First
CPA Howard Dvorkin of Debt.com says that he always urges young people to go to college, but not too far. In fact, he suggests attending community college first, which is cheaper.
According to CollegeBoard figures, tuition and fees at a two-year, public community college came in at just $3,800 for the 2021-22 academic year, up just $50 from the year before. By contrast, one year of tuition and fees at a public, four year in-state school cost students $10,740 during the same academic year.
If you attend a community college and live at home for two years, you’ll save money and sacrifice nothing, he says, adding that you can always transfer to a four-year school and finish your degree at that point.
Dvorkin also says that students with the best grades in community college can potentially get accepted to a school they wouldn’t have if they applied in high school.
“Once you transfer, hopefully you’ve not only saved money, but you’re a little more mature.” says Dvorkin. “College freshmen are notorious for money burning a hole in their pocket.”
Start Planning Early
Dr. Preston D. Cherry, who works as a financial advisor for Concurrent Financial Planning, says that parents and students can and should begin college planning before and during high school.
Parents can begin long-term savings and investment plans with college savings vehicles such as 529 plans, he says. The money that grows in these accounts can compound over time and be used to pay for school and other eligible higher education expenses.
In the meantime, some states offer tax advantages for those who contribute to a 529 college savings plan. For example, the state of Indiana offers a 20% tax credit on the first $5,000 contributed to a plan every year, which is worth up to $1,000 annually.
Dr. Cherry says that families can also plan better early by figuring out how some high school courses could serve double duty.
“Parents and students can seek dual-credit courses at the high school level that transfer to in-state universities to reduce the college credits needed to graduate and the cost of college,” he says.
Invite Family And Friends To Help
Your friends and family members may be more than willing to contribute to college savings for yourself or a dependent if they knew this was an option. Instead of getting holiday money or some cash in a birthday card, for example, they can make the same contribution to a college savings plan.
Patricia Roberts of GiftofCollege.com says that most do not know what to buy your children for birthday and holiday gifts anyway, and that they may welcome the opportunity to give a meaningful gift that will not be outgrown. Further, a gift toward higher education is easy to give since most 529 plans allow account owners to invite others. There are even gift cards for this purpose, including ones you can buy through the Gift of College platform.
“Even small gifts can add up over time and can really make a difference,” says Roberts.
Get Tuition Assistance Through Your Employer
Fred Amrein of PayforEd points out that some employers will help pay for employees to pursue a college degree. For example, Starbucks
Amrein specifically suggests checking to find out whether your company or a company you’re considering working for offers tuition assistance as well. The fact is, federal law allows employees to receive up to $5,250 per year in tuition reimbursement tax-free, and the contribution is tax-free on behalf of the employer as well through December 31, 2025.
This means your company has an incentive to offer this perk, and you won’t be penalized if you receive it. Best of all, $5,250 is pretty generous and may be enough to cover a year’s worth of tuition and fees depending on the program.
Get Serious About Scholarships
Brian Galvin, who serves as Chief Academic Officer for Varsity Tutors, says that students who want to avoid or minimize debt should treat their scholarship search like a part-time job.
There is a lot of scholarship money out there, but very little of it will come and find you, he says. Not only that, but most students who get all or most of college covered do so not with one full scholarship straight from the university, but with several smaller scholarships from corporations, nonprofit organizations, local civic groups, and other sources.
Those sources exist, says Galvin, but it’s up to you to track them down by leveraging your guidance counselor, by doing research, by writing essays and attending local women’s club and rotary club events where they discuss scholarships.
“The more obscure the scholarship, the lesser the competition, so scholarship search really does pay off.”
Never Stop Negotiating
Finally, Travis Hornsby of Student Loan Planner says that students who want to minimize borrowing should focus their energy on negotiating their financial aid package. For example, you can ask the financial aid office at your school to use “professional judgment” in determining if you could qualify for additional aid.
Hornsby says this can result in several thousand per year being cut off your tuition bill, and without any added work on your part outside of the time spent making the request.
“Colleges heavily discount their prices, and just knowing that will save you a lot of money,” says Hornsby.