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Student loan debt in the United States has come under a giant microscope over the past year amid legal battles over the Biden administration’s federal student loan forgiveness plan and the upcoming resumption of payments following a three-year pause.
See: New Student Loan Forgiveness Rule Simplifies Process — Who Qualifies?
Find: How To Build Your Savings From Scratch
All of the attention has put a renewed focus on the country’s massive amount of student debt. Cumulative debt stands at about $1.75 trillion dollars, according to Forbes, and the average borrower owes just less than $29,000. The vast majority of student loans (92%) are federal loans — and payments on those loans are due to resume by the end of August 2023.
For younger Americans (and their parents) who want to avoid amassing massive debt in college, the most obvious solution is to just not take out a student loan. That’s not always easy for people with limited financial means, but there are ways to stop (or at least lessen) student loan debt before it starts. Here’s a look at five of them.
Apply for Financial Aid
If you don’t have the money to pay for college, your first step should be to research all the scholarships and grants available. Begin by filling out and submitting the Free Application for Federal Student Aid (FAFSA), which determines any aid you qualify for on a federal and state level. Many private and school-based scholarships and grants also require a FAFSA to determine eligibility, according to a blog on the Unity College website. Even if you don’t think you will qualify for aid it’s still a good idea to fill out a FAFSA.
Choose Schools You Can Afford
Not everybody can afford to go to an Ivy League school or other pricey private university that might cost you a couple hundred thousand dollars to graduate from. The much cheaper route is to look at a public school in the state where you live. Average tuition and fees at public four-year in-state schools were $10,950 nationwide for the 2022-23 school year, Forbes reported, citing data from CollegeBoard. That compares to $28,240 for public four-year out-of-state tuition and fees, and $39,400 for private nonprofit four-year tuition and fees.
Take Our Poll: Do You Think Bankruptcy Is an Acceptable Way To Escape Student Loan Debt?
Start Out at a Community College
One route many students take is to begin taking courses at a local community college or junior college and then transfer the credits to a four-year school when they feel financially ready. This can help you save a lot of money early on — especially if can live at home and work for a couple more years. In some cases you can even start earning community college credits while in high school. Just make sure the credits are accepted at most four-year schools.
Look Into Work-Study and Other Paid Programs
Participating in a college or university work-study program can provide needed income to help you reduce or eliminate the need for a college loan. Work-study programs pay the federal minimum wage and students can use earnings to pay for tuition or cover other living expenses, according to Rick Benbow, VP of Western Governors University,
“Work schedules are amenable to class schedules,” Benbow told Forbes. “Furthermore, students participating in work-study programs while attending college gain valuable work experience and skills they can utilize throughout their careers.”
You can also look into becoming a Resident Advisor (RA) to save thousands of dollars in housing expenses. Schools typically provide free room and board to RAs, Forbes reported.
Start Saving Well Before Entering College
With so much information out there about the high cost of college, there’s no reason not to start saving as soon as possible. Parents (and their kids) can contribute to a variety of savings accounts — including College 529 plans, which allow your money to grow and compound tax-free until it’s used for eligible higher education expenses. Many states also offer tax credits or deductions when you contribute to a 529.
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