How To Pay For College Without Student Loans

This is a great article by Anthony Oneal, part of Ramsey Solutions.  It’s about a 12 minute read.

Are you worried about how you’re going to afford to send your child to college? You’re in some very good company.

I talk with parents all the time who dream of providing their children with the best higher education possible. But with the cost of college rising every year, financial concerns usually dominate the conversation. And that’s totally understandable! After all, look at these average price tags for yearly tuition and fees:

  • Public two-year college for in-district students: $3,570(1)
  • Public four-year college for in-state students: $9,970
  • Public four-year college for out-of-state students: $25,620
  • Private four-year college: $34,740

No matter which college route you go, it’s expensive. And paying for it has become one of the biggest economic problems in America today—do you compromise on the dream of helping your child go to college and maybe limit their future prospects? Or do you do the normal thing and take out student loans to ensure they have a shot at a great career?

Student Loans Are a Bad Idea

I get it—you’re willing to do whatever it takes to help your child succeed. But too often I hear from people who want the dream so badly they end up making a huge mistake by going into debt to make it happen. What I want you to understand is that the “borrow money or skip college” dilemma is a myth. You don’t need to do either one! The truth is, there are many ways to get a great education and find excellent career opportunities without borrowing a dime.

Take it from someone who went deep into student loan debt in college—if you think you’re worried about money now, it’s nothing compared to the stress and pain of life with student loan payments. Just look at the huge financial headache facing today’s college borrowers and the parents who cosigned for them:

  • According to the Federal Reserve, Americans owe a total of $1.4 trillion in student loan debt.(2)
  • The projected average student debt per graduate is $37,172.(3)
  • Seventy percent of graduates borrow at least some money for their education.
  • U.S. News & World Report found the average bachelor’s degree graduate takes 21 years to pay off their loans.(4)

Hold on a minute! The typical graduate takes over two decades to pay off their degree? No wonder some families are rethinking student loans, or college altogether. Debt may be considered normal, but it has a habit of sticking around much longer than you expect. Going into five-figure debt is no way to launch a career if you want your child to have a shot at long-term wealth building.

The good news is, your child can graduate debt-free and ready to succeed. There are so many ways to cash-flow a degree or get trained for an awesome career without borrowing. So if you’re feeling anxious about the best ways to pay for college without student loans, let’s look at the options.

Pay Cash for Your Degree

Using your own money that you’ve budgeted for specific purposes is always the best and wisest approach to paying for anything. And that includes college. If you’re the parent of younger children, now might be a great time to begin saving for their education. But if you’re getting closer to campus drop-off day and haven’t saved a dime, don’t panic! I have plenty of tips for you.

Apply for Aid

Everyone who wants to attend college must fill out what’s known as the Free Application for Federal Student Aid, or FAFSA. That’s just the form schools use to figure out how much money they can offer your child toward attendance, as well as what kinds of aid you qualify for. A few facts to know:

  • The FAFSA is a form you or your child must complete each school year.
  • It typically takes people about an hour to fill out.
  • Types of aid it covers include federal grants, work-study programs, and state aid and school aid—all of which I recommend. They also cover loans, which are a terrible idea!
  • The deadline to apply for aid for the 2018–19 school year is 06/30/19.
  • If necessary, you have until 09/14/19 to submit corrections or updates for the 2018–19 school year.
  • The window to apply for aid for the 2019–20 school year opens 10/01/18.
  • To ensure you have the best shot at all available aid for each school year, the U.S. Department of Education recommends filling out the FAFSA as soon as you can after October 1.

Depending on your financial need and the schools you consider, your child may be able to cover their education entirely through grants and/or aid from your state or the school itself. We’ll talk more about grants below. For now, just remember that all financial aid is awarded only to students who fill out their FAFSA.

Choose an Affordable School

If you were to ask friends or neighbors the most important factor in choosing a school, you’d get all kinds of answers like knowing their name recognition, the size of the dorms, or the success of the football program. But let me just boil it down for you—when it comes to choosing a school, the only relevant question is, “Can I pay for it without student loans?”

At the end of the day, your top priority should be to find a school you can afford. This might mean adjusting your, or your child’s, expectations about going to a certain dream school.

On the other hand, it’s totally possible that their dream school is still within reach if you can find enough scholarships, grants and other aid to make it happen debt-free. I’m not here to discourage anyone from pursuing their dreams. My goal is to help you see that staying out of debt has to be your top priority. If it’s a choice between a full-ride at State U and a $50,000 loan to go to a private university, I’m going to State U all day long.

Keep in mind that the traditional approach of the college student who moves away to live on campus for four years is not the only way to get an education—and it’s usually not the cheapest! Here are some alternatives:

Go to Community College First

All over America, including your hometown, we have these wonderful schools known as community colleges. And I love them. Want to know why? Because they allow people to get valuable college credits on their way to a degree at much cheaper rates than they’d get if they enrolled in four-year schools right out of high school. Then after two years of knocking out the basics, they can transfer for years three and four to a school that offers bachelor’s degrees.

And while I’m on the subject, let me deal with a myth I run into all the time. A lot of people seem to think doing their first two years at a community college will hurt them when they go to interview for jobs after graduation. The truth is that few employers—if any—even notice it when applicants attend only two years at the school they graduate from. The main thing they’re looking at is whether you have a degree, and after that what you studied.

Consider Directional Schools

Here’s a helpful tip in understanding how a lot of funding works for state schools. Most states have a flagship school where most of the academic research happens and several other schools where the focus is more on teaching. The smaller schools tend to have names indicating where they’re located in the state. These “directional” schools not only focus more on your child’s classroom experience, but also have cheaper tuition and fees. That’s a win-win.

Explore Trade Schools

In addition to four-year schools and community colleges, your child shouldn’t ignore the possibility of trade schools. That’s where students who enjoy working with all kinds of practical skills like electrical work, mechanics, plumbing, and home inspections can get valuable training that’s highly marketable. Not to mention, completing a trade school program is usually both shorter and cheaper than a bachelor’s degree.

Apply for Scholarships

Now that I’ve talked through the basics of finding financial aid and an affordable school, let’s jump into some specific strategies for cash-flowing school. Scholarships are one of your family’s most powerful tools in the journey to cover school without loans because they’re funds you earn and never have to pay back! Here are my tips for getting the most out of scholarships:

  • Treat the scholarship search like a job. Or at least encourage your child to treat it that way! Going to school debt-free is serious business, and the paycheck shows up in the form of award letters from scholarship committees. I recommend high school students spend several hours a day on summer breaks and weekends searching for and filling out every single scholarship opportunity they can find.
  • The internet is your friend here. Don’t be afraid of doing frequent searches—new scholarships and deadlines are being set up all the time.
  • Your child should be prepared to write some essays about their personal experiences and career goals.
  • Look into whether your or your spouse’s workplace offers scholarships for the children of employees.
  • Get in touch with local community groups, businesses and charities to find out if your child can apply for their scholarships. These are often awarded on the basis of community service or high school GPA.

Get Grants

Once again, we’re talking about free money you do not have to pay back—which is the only kind of aid you want. These are awarded by schools, organizations and federal assistance programs based on your financial need. Once you’ve completed your FAFSA, you’ll receive word on the federal grants you’re up for. But even if there are no dollars to be had there, you can contact your state grant agency for more aid possibilities.

Work During School

Now we’ve come to one of my favorite ways for students to pay for a debt-free education: working while they’re in school. Wait, what? Why would I want your child to work a job during college? Here’s why.

It’s been my own personal experience, as well as that of many friends and students I know, that a certain amount of work outside the classroom or library actually boosts academic performance. I know that goes against the grain of what many in our culture assume, but research confirms that students working a part-time job (less than 20 hours a week) often have better grades than those who aren’t employed.(5) A few job possibilities are:

Work-Study Programs

These allow your child to work part time while attending school. They’ll find out if they’re eligible in your FAFSA letter. Work-study jobs are usually (but not always) on campus, which makes them a convenient way to combine work with schoolwork. Just be sure your child understands that the paychecks are supposed to go toward school expenses—not for pizza or beer money!

Off-Campus Jobs

Many jobs are great for busy college students looking to cash-flow school. Your child’s best bet may be customer service jobs that are compatible with a part-time schedule. There’s a lot of money to be made waiting tables, parking cars, or working at the mall. Or consider looking for a part-time office position that might be more in line with their career goals.

Side Business

There’s no limit to the number of ways your child can earn money if they have a valuable skill, hobby or artistic knack they can turn into a marketable product. Think about crafts, clothing design, music lessons, and tutoring.

Live Off Campus

For many, one of the biggest expenses in college is the cost of room and board. But there’s an easy way to eliminate that for some big savings—live off campus. Whether it’s commuting to class from their own apartment or continuing to live with you, your child can save a bundle.

And I absolutely get the fact that either one of you might not be thrilled with those possibilities. After all, you’re both looking forward to more independence! But there’s another way to look at this that you should consider. If you can see the college years as a temporary season of necessary sacrifice for the victory of debt-free living, you’ll be able to get through anything. Even a few extra years under the same roof!

Get on a Budget

Now this is one of those pieces of advice that might sound too obvious to mention—until you realize how few people budget! Trust me, it’s worth your time to be sure your child knows how to make and stick to a budget before they leave for college.

By being proactive to list their monthly income and expenses and give every dollar a job to do, your child will begin to really take ownership of their college experience. Not only that, but they’ll also get some insight into just why you don’t want them to take the easy way out by getting school loans! And when they see how much it really costs to pay for a month of college in terms of food, transportation, clothing and rent, they’ll probably take their schoolwork more seriously too.

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