How to Pay for College without Student Loans

Facebook icon Twitter icon Print icon Email icon
Ben Luthi

By Ben Luthi

February 25, 2019

Student loans are designed to help college students pay for the cost of their education. But with an average student loan balance of nearly $30,000 for a Bachelor’s degree alone, it’s worth looking for other ways to pay for college.

The more time you or your child have before college, the easier it will be to reduce the need for student loans or avoid them altogether. If, however, you or your child are already enrolled in college, there are still a few things you can do.

Save in Advance

If you have time, consider saving for college costs with a 529 College Savings Plan or a Coverdell Education Savings Account (ESA).

Funds saved with these accounts can grow tax-free, as long as you use withdrawals for qualified education expenses. Also, more than 30 states offer tax deductions or credits for 529 plan contributions.

Keep in mind, though, that most states won’t give you the tax break unless you contribute to your state’s plan. The only exceptions are Arizona, Arkansas, Kansas, Minnesota, Missouri, Montana, and Pennsylvania.

Once you set up an account, set a monthly or annual savings goal. Depending on how long you have, you may not be able to save enough to cover the full cost of a college education. But even a little is better than nothing. Every dollar you save is a dollar less you’ll have to borrow.

Get Free Money

If a student gets good grades and test scores, they may have a shot at earning an academic scholarship. If not, there are plenty of other ways to get free money for college in the form of scholarships and grants.

 There are several scholarship search websites that provide millions of scholarship opportunities for students from all walks of life. Your chosen college may also offer additional scholarships that aren’t based on academic performance.

By filling out the Free Application for Federal Student Aid (FAFSA), you can also potentially qualify for federal grant money. Like most scholarships, you don’t need to pay this back as you would a student loan.

Enroll at a Low-Cost College

It may be nice to have a prestigious university on your resume, but there are several colleges that may offer a quality education at a fraction of the price of schools with household names.

Start by looking at community and in-state public colleges. Even if you attend one of these colleges for the first couple of years then transfer to your preferred university, you can still save thousands, if not tens of thousands, of dollars. Or, perhaps a 2-year degree is your goal?

But, beware of taking a detour through a community college on your way to a 4-year degree, as you may miss your destination. About a fifth of students who start off at a community college, intending to obtain a Bachelor’s degree, succeed within six years. That compares unfavorably with students who start off at a 4-year college, who are more than three times as likely to attain a Bachelor’s degree.

Depending on your income level, you may even qualify to attend one of the six dozen colleges and universities in the U.S. that have no-loan financial aid policies. Instead of providing loans as part of their financial aid packages, these schools offer grants and work-study programs.

Attending one of these schools may not eliminate your need for student loans altogether, but the possibility is there. The average debt at graduation at Princeton University, the first of the no-loans colleges, is less than $10,000.

Work during School

Attending college with a full schedule of classes can feel like a full-time job. But even a part-time job on campus can help you save enough to stave off crippling student loan debt.

Let’s say, for example, that you get a job working 12 hours a week and earn $8 an hour. Assuming you work that job for four full years with no pay raise, you’d earn just under $20,000 in gross income — and that’s not including more work hours during the summer.

That’s not a lot, but even after taxes, it could save you from having to take on thousands in student loan debt that you’d end up paying off over the next 10 years or more.

The more you can work, the more you’ll earn. Just make sure you have a good balance between your job, school work, and social life.

Don’t work more than 12 hours a week when classes are in session. Every additional hour takes time away from academics. Students who work a full-time job during the school year are half as likely to graduate as students who work 12 hours or less a week.

Live at Home instead of On-Campus

If you live near the college campus, having your child live at home instead of in the dormitories can save $10,000 or more per year.

Commuting can be tedious and parking a challenge on college campuses. Public transportation may shut down late at night. Your child will miss out on late night study sessions and other aspects of the college experience.

But, better to have your child live at home during their college career than have to live at home after college because they graduated with too much student loan debt.

Start Planning Sooner Rather Than Later

The sooner you start preparing for college costs, the easier it will be to avoid student loan debt. If you’re a parent, start saving with a 529 plan or Coverdell ESA when your children are young. And if you’re a high school student, expand your search for a college that can give you a good education without forcing you to rack up massive student loan balances.

Whatever you do, consider student loans as a last resort to pay for college instead of the default solution. It’ll require more effort now, but it’ll all be worth it when you graduate with less debt or none at all.

A good place to start:

See the best 529 plans, personalized for you