Student Loan Debt is a problem throughout the United States. Millions of students use their student loans to pay for housing, food, tuition, books, parking, and transportation without realizing the impact their financial decisions will have on their entire lives. Here are 16 ways you can avoid or significantly reduce student loan debt.
BEFORE YOU START COLLEGE
1. Save for College with a 529 Account
Hopefully your parents opened and regularly funded a 529 Education Account for you. If not, it is never too late to open one. You can even open and use a 529 after you already started college. Each state offers a triple-tax advantaged 529 education savings/investment account that is tax-deductible and grows tax free as long as you use the money to pay for qualified educational expenses. This includes tuition, books, laptop, software, and on-campus housing. Whats more, you get a discount on your college tuition if you pay for tuition using your 529 account. If you have a savings account, move all of your money into your 529 account and use it to pay for your education. This will help you save on taxes when you legally become an adult and owe taxes.
2. Try to get a Scholarship or Grant
While in high school, participate in extracurricular activities and try to be in leadership roles, whether it’s the captain of your sports team, or the president of the Chess Club, anything helps. My STEM-based high school offered us the chance to attend summer college programs where we got to experience campus life first-hand. If your high school offers anything like that, apply for it. Focus hard on improving your GPA. Most of the good scholarships need a minimum GPA of 3.5/4.0. Check out Fastweb.com, a site that helps you find and apply for scholarships that fit you best.
3. Take AP classes in High School
AP, or Advanced Placement courses, are college-level courses offered by thousands of high schools. After completion of the course, you will be given the opportunity to take an AP test. If you pass the test, you earn free college credits. When I was in high school, AP History, AP Biology, and AP Calculus were among the most common AP courses offered.
4. Pick a Local School
Choosing a local school means you don’t need to pay for on or off campus housing. Many state schools offer more affordable branch campuses within a commutable distance. You can continue to live with family members and commute from home. That saves you $6000-$10,000 each year.
In addition, out-of-state tuition costs are as much as 35% higher than in-state tuition costs. My college roommate spent 3 times the amount I did on tuition because he was out-of-state.
5. Pick a State School or Community College
Everyone knows Community College (CC) is relatively cheap. Community college is a popular option for cost-conscious students. CC students typically spend the first 2 years in CC before transferring to a 4-year university. Plan ahead and make sure that your planned university will accept your community college credits.
Similarly, state schools are much cheaper than private schools or out-of-state schools. Most private schools are demanding over $50,000 per year in tuition costs while State Schools are half that cost.
6. Consider Other Loan Options
There are cheaper ways to borrow money for college. Ask your parents to try “Velocity Banking” with a low interest Home Equity Line of Credit.
AFTER YOU START COLLEGE
7. The Student Discount
As a student with a student ID and email address, you get many discounts. When I was a student, Apple took $100 off my laptop, gave me a free iPod Mini, and included 6 months of Apple Care Free. I was even able to buy a Canon color printer for $15 that still works well 12 years later.
Amazon gives students a discount on their Prime membership. You can also get discounts on movie tickets, clothing, or food at restaurants. Most merchants will not advertise their student loan discounts so you need to remember to ask every time you make a purchase somewhere.
8. Side Hustles and Passive Income
There are hundreds of ways to get extra income. Take surveys through apps like 1Q and get paid. Work on your own time and deliver food with DoorDash, Grubhub, PostMates, or Uber Eats. Become an Uber of Lyft driver. Start a Blog through one of many hosts like BlueHost. Design and sell shirts online or offer a product or service on websites like Etsy and Fiver. You can also simply find a part-time job near campus. All of your earnings could go straight into a 529 Education Account to save you on taxes, then you can pay for educational expenses from there.
9. The College Employee Discount
There are plenty of on-campus jobs that will give you a discount on your tuition. If your parent is an employee or professor at your school, you can get a free ride through college. Two of my friends went through Medical School for free because their father was a professor with that school. If you work as a Teacher’s Assistant or Research Assistant, you can get a discount on your tuition or get paid regularly.
10. Discounted Credits
If you are a student at a university, you can take and transfer a limited number of credits from another school. I attended a state school, but took 4 summer classes at my local community college to save on tuition costs. This strategy will also help you ensure that you finish college within 4 years. You don’t want to pay for a 5th year of college, computer lab and paper fees, housing, and everyday living costs just to pass your last two classes.
If you buy the text book(s) and study hard, you can earn credits without taking classes. You always have the option to pay a small fee to get a class curriculum and self-study. To earn the credits for that class, you need to pass a cumulative final. This is typically reserved for higher GPA students.
11. Pay Down Your Loan
You may not have graduated yet, but you need to pay down your student loan interest and principle any chance you get. If you already paid for the semester with student loans, pay down your student loans with any income you make from part time jobs or passive income.
12. Budget
This should be obvious, but don’t waste money. Set a budget and stick to it. You can try envelope budgeting with GoodBudget, or sign up with NerdWallet or Mint to track your expenses, credit score, and budget. As a college student, I took advantage of cheap food with $1 pizza nights, Wal-Mart, and Taco-Bell. Some students ate Ramen noodles all day while the broke students spent all of their money on Chipotle and Starbucks.
13. Get a Roommate
Affording a dorm or apartment is difficult for most. Find a roommate willing to share the cost while being stuck with you in a small room for as long as 4 years. With a roommate, you can also share utility, grocery, and internet costs.
14. Sublet Your Apartment
During the Summer semester, most students come home. A lease is a lease and someone has to pay for it. Subletting is a strategy used by many parents and students looking to avoid paying for their apartment while they are home with family. This could save you $1500-3000 in rent each Summer.
15. Pick a Major Sooner Than Later
You may not know what you want to do in life, but find out fast. The longer you wait, the more you will spend on your education. Try to declare your major as early as possible. I know a few people who have switched majors multiple times. It took them 6-7 years to graduate. I don’t even want to think about how much they owe in student loans.
16. Use Campus Resources
Most students are unaware of all of the campus resources included in their tuition costs. You could save hundreds or thousands of dollars if you utilize these resources. For example, you often don’t need to buy a computer or printer for college. Some of these campus resources include:
- Free Gym Membership
- Use of the computer lab 24/7 through all campuses.
- Free Internet through all campuses
- Free or Discounted software downloads such as Microsoft Office
- Use of costly and advanced softwares through VPN
- Free Career Fairs
- Free Resume & Cover Letter Writing Services
- Free Student Counseling
- Free Tutoring
- Free Bus Passes
- Free Parking Passes
- Student Discount Programs
In Conclusion
While I did utilize most of these strategies, I wish I #1 Saved for College with a 529 Account and #16 Use Campus Resources. I did not know that 529 accounts existed until the birth of my daughter and I did not know about my campus resources until I already spent the money on tech and software. I ended up with $40,000 in student loans. With strict budgeting, I was able to pay off those loans in just 3 years! I hope that this post will help you, a friend, or a family member significantly reduce or eliminate student loan debt before graduation.
Affiliate Link Notice: This post contains affiliate links, which means I may earn a small commission, at no additional cost to you, if you decide to purchase or sign up for a product through my referral links. While you can sign up through any other means, it would help support the blog if you sign up through my links. Thanks.
