While higher education is typically a good investment, the surging costs of a college degree have been blurring the line for years. Sure, college graduates tend to earn more, but they’re also facing growing debt loads, too. According to Student Loan Hero, the average 2016 college graduate left school with more than $37,000 in student loan debt.
Numerous factors have led to our growing reliance on debt, including increasing tuition costs, less available aid, and the growing number of for-profit schools. The thing is, the most horrific instances of student loan debt can usually be avoided if you plan ahead.
If you’re a student approaching college age or a parent hoping to help their kid avoid debt, here are some of the best ways to borrow less:
#1: Go To Community College (for at least two years).
Most students who plan to pursue a bachelor’s degree never consider the prospect of attending community college first. If you want to save money, this is one of the biggest mistakes you can make.
According to College Board figures, average tuition for four-year public schools was $9,650 nationally for the 2017-2018 school year. Meanwhile, public, two-year schools reported annual tuition of approximately $3,520. If your goal is saving money and borrowing less, you can achieve considerable savings by attending community college for two years, then transferring to a four-year school to finish your studies and earn your degree.
While you might miss out on the full “college experience” with this strategy, you’ll save at least $10,000 in tuition those first two years. Is the savings worth it? Only you can decide.
#2: Pick an In-State College or University.
If you’re dead set on pursuing your entire four-year degree at a four-year college or university, you may save big by choosing an in-state school instead of studying elsewhere. This is mostly due to the massive investments and subsidies offered to schools that accept in-state students.
College Board figures show exactly what we mean. For the 2016-17 school year, average tuition for public, in-state colleges and universities was $9,650. Out-of-state students, on the other hand, paid an average of $24,930 for one year of tuition.
Tack on the fact that attending an out-of-state school could mean more travel costs and the difference in what you’ll pay – and what you borrow – could be astronomical.
#3: Avoid For-Profit Colleges Like the Plague.
For-profit colleges have become more and more prevalent, mostly because businesses who see dollar signs have weaseled their way into higher ed. Unfortunately, for-profit colleges cost a lot more than their not-for-profit and public counterparts. If you dig a little deeper, you’ll even find that many for-profit schools aren’t even fully-accredited.
Numbers from College Board paint a very clear picture as to what’s at stake. During the 2016-17 school year, for-profit schools (most of which are two-year schools) charged average tuition of $16,000. Compare that to the cost of average tuition at a public, two-year institutions ($3,520 nationally the same year), and you’ll see the crux of the problem.
Would you rather pay a little over $7,000 for a two-year degree, or $32,000?
#4: Work While You Study.
Attending school full-time is a huge commitment, but you should try to work and study if you can. You may not have to pay payments on your school bills during school, but it doesn’t mean you can’t.
By paying some of your college expenses as you go, you can reduce the amount you borrow in any amount commensurate with your work. Let’s say you can only throw an extra $100 toward college expenses during your four years in school. That’s $4,800 in cash you didn’t have to borrow, but also money you won’t have to pay interest on.
For students who can juggle classes with work without impacting their performance, working during college is a win-win.
#5: Consider School-Sponsored Work-Study Programs.
While many private companies offer work-study programs of their own, the federal government’s work-study program is especially popular. This program allows students to earn money to help pay education expenses as they go, and is available to undergraduate, graduate, and professional students with financial need.
Since this program is only offered to students of schools who have chosen to participate in this program, the best way to see if you qualify is to check with your school’s financial aid office. Jobs in this program are offered both on and off-campus, and you’re promised federal minimum wage or more for each hour you work.
#6: Check Out Student Loan Forgiveness Programs.
While your goal may be avoiding student loans, it’s possible your field of study is so expensive you’ll require them no matter what. In that case, you may want to look into federally-sponsored student loan forgiveness programs.
While each of these programs works differently, they all let you release your student loan liability at some point in the future. With income-driven repayment programs, for example, you’ll pay a lower monthly payment until your loan is forgiven after 20-25 years. The big caveat or “gotcha” with this program is the fact you’ll need to pay income taxes on forgiven amounts in the end.
With public service loan forgiveness, also known as PSLF, you can have your loans forgiven in ten years if you’re willing to work in specific, government-approved public service jobs during that time.
Also keep in mind that additional loan forgiveness programs may be available to graduates in certain, high-need fields via their state or the federal government.
#7: Apply For Scholarships and Grants.
While applying for scholarships and grants might seem like the most obvious way to save money on school, you might be amazed at how few students actually bother with the process. Some claim they don’t have time, while others assume they won’t qualify for scholarships and don’t want to put in the work. Either way, they’re probably wrong.
Since all kinds of financial aid is available, you’re only hurting yourself if you don’t put in the effort. You can and should apply for merit-based financial aid in the form of scholarships and grants. Depending on your situation, you can also apply for need-based financial aid or school-based aid.
If you’re not sure how to get started, reach out to your school’s financial aid office for help. You can also check out websites like Scholarships.com and College Board for more information.
#8: “Price Shop” For Your College Degree.
Far too many students get their hearts set on a specific school and fail to shop around. If you’re pursuing a popular degree that’s offered at more than one institution in your area, this can be a costly mistake. The very same degree can cost tens of thousands of dollars more than it has to if you choose an expensive school over an affordable one.
Let’s say you live in Iowa and plan to pursue a degree in Biomedical Engineering. After a quick search on the National Center for Education Statistics website, you find that two schools offer this program in your area – Dordt College in Sioux Falls and the University of Iowa. While Dordt College reported annual tuition of $29,130 for the 2016-17 school year, you could earn the same degree at the University of Iowa for $8,575 per year. While the amount of financial aid you get at both schools could change these numbers quite a bit, the fact remains that, for most students, pursuing a biomedical engineering degree at Dort would cost tens of thousands of dollars more.
Unfortunately, those costs don’t typically translate into higher pay. Chances are, your employer won’t really care where you earned your degree anyway.
The Bottom Line
Pursuing a college degree is still a good idea, but you can save a bundle by using common sense. Before you choose a school and a program, take the time to consider pursuing an out-of-the-box strategy or a cheaper program in general. And don’t forget; you could save a bundle by choosing a community college - at least at first.
Soul-crushing student loan amounts may be the norm these days, but that doesn’t mean you’re destined for a lifetime of debt. With a little research and flexibility, you could escape school with fewer loans and a lot more freedom.