College is a big next step for many high school graduates. The same applies to people pursuing graduate degrees or changing careers. But how to avoid student loans is also a big question.
The average total cost of a four-year college education comes in at around $122,000. And it’s much higher if you factor in private colleges. In addition, the average cost of a master’s degree could run you $30,000 a year or much more.
As a result of this high cost, most people have to rely on some type of debt vehicle to fund their college education, like living off student loans. It’s especially true if you’re trying to figure out how to pay for college with no money.
But student loans can create financial barriers for you later on. Here’s why you should avoid them, and figure out how to pay for college without loans.
Why you should try to avoid student loans
What’s the big deal about student loans anyway? They’re so common that you might not think twice about taking on a student loan payment.
Undergraduate and graduate students alike choose to take out student loans. Some from necessity, others because they don’t have enough information. But here’s why you should avoid them.
Average student loan debt
In many cases, what comes after a great college experience? Student loan repayment. Loan repayments are really costing people in the long run.
The average federal student loan debt as of 2024 is over $38,375 That’s a lot of money for borrowers to pay back!
And it’s not what you need right after you graduate college. You’ll have plenty of other money decisions to make; so if you can, you want to avoid adding student debt to the list.
High interest on loans
Student loan interest fees aren’t cheap. The average interest for federal loans for an undergraduate degree is 5.50% for 2023-2024 per Bank Rate.
Key steps to avoid student loans
Finding the money to attend school can be a stressful experience. That being said, here are some key tips for how to avoid student loans.
1. Start saving early to pay for college while learning how to avoid student loans
When it comes to saving for college, every dollar you’re able to save will reduce the amount you owe when you start getting your tuition bills.
If you can get a part-time job, focus on employers that have some sort of college savings benefit. It can offset the amount of money you need to save.
Discuss finances with your parents
If your parents are helping to pay for college, have a conversation with them to talk about putting money aside beforehand. That way you can avoid living off student loans. You can also discuss the various savings options that provide additional benefits for college savings, like a 529b.
It’s a good idea to have this conversation as early as possible. You can determine how much of your college costs your parents can help pay and how much you’ll be paying on your own.
Save up
Also, track your savings goal. Create a designated account and build your college savings into your budget. That way you can create a plan for how much you need to save from each paycheck you earn.
Saving for college is a big part of how to avoid student loans. It’s all about taking advantage of the time you have to save as much as you can before your first college bill is due.
2. Compare the cost of your college degree at various colleges
Sometimes your heart might be set on a college because of its reputation or location. But there are many excellent options for colleges that will give you an equally good education, and help you with how to pay for college without loans.
Community colleges and in-state schools
You can get a great education for your first couple of years at a community college, or go to an in-state school. Usually, state tuition is cheaper than out of state, and you can save thousands, so state students take a smart approach.
Some schools offer benefits for in-county students. You can also receive grants from the state if you decide to attend an in-state school.
Calculate savings when learning how to avoid student loans
To determine your potential savings, compare community college costs to 4-year college costs. Also, compare state versus private college costs and the costs of attending college in-state vs out of state. Doing these comparisons can potentially save you a large amount of money on your college education.
As you compare costs, also look at college rankings and reviews to help you make the best decision.
3. Research scholarships, grants, assistantships, and even crowdfunding to pay for college
Scholarships and grants are a great way to pay for college and a key part of how to avoid student loans. They’re essentially free money (based upon specific criteria).
It’s definitely worthwhile to spend some time before college starts to research different scholarships and grants for your program and apply to as many as possible.
Federal student aid
Check out federal student aid options by filling out the FAFSA (Free Application for Federal Student Aid). It will help you figure out what kind of financial aid you qualify for.
Then you can decide to accept it or not, depending on if it’s a loan or free money. Typically, loan options, work-study programs, scholarships, and grants are possible.
Assistantship
You may not qualify for an assistantship in your first year, but it’s possible to get one as you gain more college experience. It can also help knock a chunk off your college expenses.
Crowdfunding
Crowdfunding is another option when you need to know how to pay for college with no money. Consider crowdfunding sites to crowdfund everything from tuition to books.
Be sure to keep your grades up before and during college to keep your scholarships
Many scholarships target students who do well academically. In addition, some scholarships focus on certain demographics in addition to good grades e.g. scholarships for black women.
If you want to qualify for any of these scholarships, you’ll need to work to either get your GPA to the required cut-off or work to maintain your GPA if you are above the cut-off.
Most scholarships require at least a 3.0, while some require you to maintain a 3.5 while you are in college. Make sure you are aware of the requirements to keep your scholarship.
Maintaining this GPA can be much harder than it would have been in high school or even undergrad. That’s why it’s best to seek out academic support if you need to.
You can start researching scholarships on studentaid.gov.
4. Research your student loan options
After finding out how much college will cost, decide if you should take on loans and what type of loans to get.
Ideally, you want to try not to take on more than what you’ll earn your first year out of college. Your monthly payment for a loan after college should be no more than 10% of your monthly income.
You’ll be able to pay back your loans based on your future income and within a reasonable timeframe. Or use this guide as an alternative for how to avoid student loans entirely.