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10 tips to avoid taking out extra student loans in college

Paid internships, community college courses and more ways to avoid unnecessary debt.

Around 65% of college students graduated with student debt in 2017, according to a study by the Institute for College Access and Success. While there might not be a way around loans for some students, there are ways to reduce how much you have to borrow. And there are a few steps parents can take to help their children avoid debt.

1. Consider your budget when you apply

Knowing how much your family can realistically afford to spend can help you rule out schools that don’t have a strong enough financial aid program.

And don’t be fooled by schools that have a higher cost of attendance. Some more expensive universities have a full need-based financial aid program, meaning you could end up actually borrowing less than if you’d attended a slightly less expensive university with fewer financial aid opportunities.

How much will my family be expected to contribute?

Many schools base the amount they expect your family to contribute toward your education costs on the formula used on the FAFSA or College Board’s CSS Profile. Others might use their own formula and provide a net price calculator on their financial aid website for you to use.

Run these numbers to learn how much your family might be expected to contribute with each school you’re seriously considering to get an idea if it’s in your budget. Or, use the FASFA4caster to get an idea of how much federal aid you might qualify for and calculate your EFC.

2. Apply for talent- and merit-based scholarships

Often colleges automatically consider all students for some scholarships. But many also offer additional financial aid opportunities that require a separate application. Scholarships may be available based on academic achievement, as well as athletics, artistic capability or to members of underrepresented groups.

Start with your school’s financial aid website, as well as any relevant departments. You might have to write an essay, make a community service commitment or take a few specialized courses. But you could end up saving thousands during your academic career.

And don’t just stop at your school. Find out-of-the-box scholarships from outside organizations for everything from duck-calling to being tall.

3. Look into grants

Sometimes students qualify for need-based financing, but the school doesn’t have enough funds to cover every student’s need. In this case, you could qualify for additional grants, which are based on your financial situation rather than personal achievements.

Reach out to your school’s financial aid department to ask about grant opportunities — especially if you’re attending an in-state school. You may qualify for state or local grant opportunities, as well as funding from private organizations.

4. Consider going to college abroad

American schools are generally more expensive than studying in Europe. If you were planning on studying abroad, you might want to consider getting your degree overseas. Some schools in countries like Norway and Germany offer free tuition to international students, while others cost less than what you might pay for a meal plan.

5. Apply to tuition-free schools

You don’t need to travel far to find a tuition-free school. A handful of American schools like Deep Springs College offer full rides to all students who qualify — often going beyond just tuition and fees. Some of these are only available to state residents, though not all. You might also need to take courses on a certain subject or complete a project in exchange for the lack of tuition.

6. Get a job or paid internship

It’s not just your family that’s expected to contribute to your education. Most schools also factor in a student contribution, which you can often cover through a work-study program. But you’ll also need money to cover day-to-day expenses, which some students choose to fund with student loans.

Since your work-study hours are based on financial need, you might be able to make more by getting a part-time job while you’re in school instead of (or in addition to) work-study. Even better, a paid internship can help build your career and might even lead to higher-paying positions while you’re still in school.

7. Work during the summers

A summer job can shave a few thousand dollars off your student loans each year. Even working a minimum wage job full time for three months can earn you over $3,500.

Even better — find a job or internship that aligns with your career so you can land a higher-paying position when you graduate and afford a shorter repayment term on your student loans. You’ll have less debt to begin with, be in debt for a shorter period of time and save on interest.

8. Make a personal spending plan

Managing your spending can prevent you from having to rely on student loan refunds to cover personal expenses while in school. Give yourself a weekly or monthly budget and keep track of your spending. Don’t want to crunch the numbers on your own? Consider a budgeting app.

Be realistic and leave some room for unexpected costs. That way you’ll have an easier time staying within your means and sticking with your plan.

9. Take advantage of low-cost or free credits

Signing up for AP classes or free college-level courses while you’re still in high school or taking summer classes at your community college can cut down on the number of credits you have to take at your four-year school.

Each college credit can cost thousands of dollars, especially if you’re planning on going to a private four-year institution. The fewer you need to pay for there, the less you have to borrow.

Or, look into international universities offering free or low-cost tuition to US students. Though you still might have to pay fees and living expenses, it’s often less expensive than attending college stateside.

10. Be an informed borrower

If and when you need to take out student loans, make sure you understand all of your options. Start with federal loans first — these usually have the most favorable rates, terms and flexible repayment plans.

In the case that private student loans are your only option, invest time researching your options before you apply. Make sure you, your school and your cosigner are all eligible, and that you can afford the repayments when they start.

Tips for parents to avoid student loans

Students aren’t the only ones who need to plan for paying for college. Parents can also take steps to reduce the amount of debt their children graduate with.

Start a 529 plan

A 529 plan is a state-sponsored college savings plans that work a lot like a 401(k) or IRA. You don’t have to pay income tax on funds you deposit or withdraw to cover educational expenses. The sooner you start saving, the more you’ll have to contribute.

Talk to your employer

Some employers offer tuition assistance programs for employees and their family members — especially if you work at an institution connected to a university. Ask you HR department if they offer any benefits to reduce or break up the cost of your child’s education.

Plan your contribution ahead of time

It’s up to you to figure out how much you’re able to contribute to your child’s education — if at all. Going into the college application process with a set number in mind can help you and your kid make informed decisions about where to go to school and what types of aid to apply for.

10 more ways to avoid graduating with student debt

Bottom line

Cutting back on how much you borrow in student loans can lower the cost of college in the long run. Plus, you’ll have more freedom to travel and experiment with your career if you aren’t weighed down with high monthly repayments.

Asking yourself a few questions first can help you decide if a student loan is right for you. And if you do decide to borrow, compare student loan providers to find the best deal out there.

Frequently asked questions

Can I make extra payments on my student loans without penalty?

Generally, yes. All federal loans and nearly all private student loans don’t come with prepayment penalties, meaning you can pay them off early at no extra cost to save on interest.

Before you make an extra repayment, reach out to your servicer to make sure it’s going toward the principal rather than interest or putting your loan in “paid-ahead status.” This will save you the most.

How quickly can I pay off my student loans?

That depends on your financial situation and your lender. Theoretically, you can pay off your student loans immediately if you have the funds. The shortest loan term is typically five or seven years, though you can usually pay them off early at no extra cost.

How can a 529 plan affect my financial aid package?

It depends on the school and your family’s financial situation. Generally, a 529 plan can cut down on how much you have to borrow. But it can also affect the amount of need-based financial aid you qualify for.

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