How I (Almost) Completely Avoided Taking Out Student Loans

 August 30, 2021
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How to avoid student loans is a question that bothers multiple generations.

If you’re a teen (or the parent of one), you might be hoping to get ahead of rising college costs to skip or limit your family’s borrowing. And if you’re a recent (or not-so-recent) college student, you might be wondering how to avoid student loan repayment, or at least be done with it as fast as possible.

Fortunately, no matter where you are in life, there are ways to avoid student loans. Future college students might look to supercharge their cash flow. And older borrowers could investigate ways to speed through repayment via loan forgiveness or refinancing programs.

Let’s review solutions for each of these predicaments:

How to avoid student loans — before attending college

Far and away the best way to avoid paying student loans is to avoid taking out a student loan in the first place. Here are nine ways to do just that, including some tips from personal finance writer Ben Luthi that we’ve put to use personally.

1. Start or amp up your saving now
2. Consider shortening your route to a degree
3. Include inexpensive colleges on your college list
4. File your FAFSA and seek out grants
5. Apply for school, private scholarships too
6. Negotiate your financial aid package
7. Increase your income, if possible
8. Trim your living expenses
9. Stick to a budget

Our expert’s experience: How to avoid student loans

When I graduated from high school, I had a four-year, full-tuition academic scholarship to the University of Utah. After my freshman year, however, I transferred to Brigham Young University. They offered me only a two-year, half-tuition academic scholarship.

Knowing that I was on my own for my education costs, I started strategizing how to pay for my education without taking out student loans.

My habits, many of which are listed below, lessened the need for student loans. I left BYU with $9,133 in student debt, well below the five-figure debt that many students leave school having to repay.

Ben Luthi

1. Start or amp up your saving now

While it helps to have plenty of time on the horizon before enrolling in college, it’s never too early or late to start saving for the costs.

If you’re not yet of college age, huddle with your family about where you stand with your college savings. Commit to either starting or contributing to a 529 college savings plan or alternative account.

If you’re already on campus, sock away what you can, even if it’s just in a high-yield savings account. Managing your cash flow, which we’ll discuss below, will help you in this aim.

2. Consider shortening your route to a degree

The less time you spend in school, the more money you’ll save. So it’s wise to make sure you aren’t taking classes longer than you need to.

One way to shorten your degree path is to enroll in AP classes or dual enrollment while you’re still in high school. This way, you can earn college credits so that you’ll step on campus having already made progress toward a diploma.

You might also consider skipping the traditional four-year college program altogether. Think about your future career and whether the industry requires a bachelor’s degree or something else. If you’re an aspiring web developer, for example, you might look into coding bootcamps that require anywhere from weeks to months of post-high school education.

3. Include inexpensive colleges on your college list

The main driver for student debt is the cost of tuition and fees, which continue to rise. In many cases, however, you can find a college nearby that charges below-average tuition and fees while also providing a lot of value.

You might consider…

  • Attending a four-year public school nearby to score a discounted, in-state tuition rate.
  • Enrolling at your local community college for its lower price (and you could always transfer to a four-year program later on.)
  • Asking colleges and universities about whether they offer tuition waivers.

There are also…

  • Work colleges that offer reduced or free tuition in exchange for students who are approved to work jobs on or off campus
  • No-loans colleges that promise to avoid student loans in financial aid packages

You may need to do some extra research to find a suitable college with low tuition costs, but the money you save years beyond your graduation is worth it.

4. File your FAFSA and seek out grants

Filing the Free Application for Federal Student Aid (FAFSA) is just about the most important thing to do in this context. The FAFSA is the gateway to federal grants and work-study programs as well as loans.

Don’t forget that states also dole out grants for college. To be eligible for them, you might also have to submit your state’s version of the FAFSA. If you live in the Sunshine State, for example, you should complete the Florida Financial Aid Application (FFAA).

Read up on grants for…
Black women
Graduate students
Adults returning to college
Writers
Female entrepreneurs
Paying off student loans

5. Apply for school, private scholarships too

Not everyone qualifies for academic scholarships out of high school. Depending on how studious you are, however, you can usually become eligible after your first semester or two. The program for your chosen area of study may also offer scholarships for their students.

Check out our scholarship resources for these majors…
Art
Business
Communications
Computer science
Criminal justice
Education
Engineering
History
Journalism
Medical school
Music
Nursing school
Photography
Poetry

Your university isn’t your only source for scholarships either. There are many organizations and companies nationwide helping students cover the cost of their education. You can find these opportunities using scholarship search engines or by bugging your financial aid office.

Our expert’s experience: How to avoid student loans

During my time at BYU, I applied for several scholarships in the business program and with outside organizations. I also studied hard to maintain good grades. Doing this qualified me for a full-tuition academic scholarship after the initial one ended. The money I received covered most of my tuition costs.

Ben Luthi

6. Negotiate your financial aid package

Once you apply to the schools on your finalized college list, you’ll start receiving Student Aid Reports that document your eligibility for federal, state and school-offered assistance. After that, you’ll begin receiving financial aid award letters.

These letters include your financial aid package, which could comprise grants and scholarships, work-study programs and loans. You can compare these offers side by side using our calculator (below). You might have a legitimate reason to negotiate your financial aid.

Compare Your Financial Aid Awards

Compare Your Financial Aid Awards

School 1

Cost of attendance

Expected family contribution

Net cost of attendance

7,000
Gift aid: Money that generally doesn’t need to be repaid

Grants

Scholarships

Other gift aid

Work-study

Total aid

2,500
Student loans: Borrowed money that must be repaid with interest

Direct Subsidized Loan

Direct Unsubsidized Loan

Parent PLUS Loan

Non-federal loans

Total borrowing

3,500

School 2

Cost of attendance

Expected family contribution

Net cost of attendance

0
Gift aid: Money that generally doesn’t need to be repaid

Grants

Scholarships

Other gift aid

Work-study

Total aid

0
Student loans: Borrowed money that must be repaid with interest

Direct Subsidized Loan

Direct Unsubsidized Loan

Parent PLUS Loan

Non-federal loans

Total borrowing

0

School 3

Cost of attendance

Expected family contribution

Net cost of attendance

0
Gift aid: Money that generally doesn’t need to be repaid

Grants

Scholarships

Other gift aid

Work-study

Total aid

0
Student loans: Borrowed money that must be repaid with interest

Direct Subsidized Loan

Direct Unsubsidized Loan

Parent PLUS Loan

Non-federal loans

Total borrowing

0

7. Increase your income, if possible

It’s not always easy to work during school. Depending on the program you’re in, your studies may take up a large chunk of your time. There’s the social aspect of college to consider as well. If you want to decrease your dependence on debt, though, getting a job goes a long way.

  • If you’re already working, ask your employer if it offers tuition reimbursement.
  • Perhaps accept that federal work-study job that was offered in your financial aid package.
  • Consider an internship or part-time job, especially if it helps pay the bills without taking away from class time.
Our expert’s experience: How to avoid student loans

I worked at least 32 hours a week doing customer service while going to school full-time. The income I earned provided enough cash to cover my living expenses, the remaining tuition after scholarships and then some. In fact, I took a six-week trip to Fiji and New Zealand one summer without going into debt.

Of course, the setup wasn’t very conducive to a robust social life. I woke up early and went to bed late, with most of my time in between dedicated to classes, work and studying. But I still managed to allocate my time in a way to spend time with friends and date my future wife.

Ben Luthi

8. Trim your living expenses

Living like a student is a sometimes misunderstood phrase. It doesn’t necessarily mean paying for expensive on-campus housing and college meal plans.

If you’re really looking to avoid student loans, consider trimming your living costs by sharing low-cost, off-campus housing with roommates and splitting your food and cooking bills. (If you’re intent on living on campus, consider becoming an “RA” or resident advisor to lower your tuition bill.)

Another secondary but significant expense that can be cut: shiny new textbooks. Look into acquiring used books or renting them. And, of course, selling your textbooks when you’re done with them is a nice way to make a little extra money.

9. Stick to a budget

Regardless of how much income you earn or the source, living on a budget can help you manage your cash flow (particularly if you enroll in a tuition payment plan that spreads out the burden of your college costs). It can also help you avoid overspending on unnecessary things, which can help you avoid student loans.

Our expert’s experience: How to avoid student loans

I didn’t start budgeting until a year and a half after I started at BYU. At the time, I used a simple spreadsheet and tracked my expenses manually. Later, I souped up my spreadsheet to automatically update the budget when I added a new transaction. I planned out my expenses for each month and left money for savings as well in case my job situation changed.

Ben Luthi

Depending on your preferred budgeting method, you can do a monthly budget as well as one for each semester.

If you can’t fully avoid student loans…

If after adopting our nine strategies, you’ve still found borrowing to be necessary, make sure you do it wisely. First, rely on federal loans that you might have been offered in schools’ financial aid packages. Federal loans feature the best repayment protections.

And private student loans can help you bridge any remaining gap in your cost of attendance. Just be sure to compare at least a few lenders, pitting them against each other on APRs, discounts and fees as well as repayment terms and safeguards. Then you’ll find the best overall loan for your situation.

How to avoid student loans — after you’ve borrowed

If you’ve already taken out education debt and are pondering how to get rid of it, there is a whole different set of potential solutions for you.

Our guide to jump-starting your student loan repayment is a good place to start. You can learn about choosing the right repayment strategy, scoring a discount for enrolling in automatic payments and improving your cash flow to aggressively prepay your debt.

Those measures will help, but they won’t teach you how to avoid student loan dues in the near term. For more drastic measures, you might consider:

  • Student loan forgiveness programs: There are myriad loan forgiveness, cancellation and discharge programs for federal loan-holders. Check your eligibility for partial or full relief of your remaining balance.
  • Student loan repayment assistance programs (LRAPs): Your location or career might make you eligible for state and employer-based repayment assistance programs. You could have a chunk of your balance repaid in exchange for working in a certain area.
  • Student loan refinancing: By refinancing with a private lender, you could secure a lower interest rate and a shorter repayment term to avoid student loans lasting forever. Just be sure refinancing your federal loans is the right choice since you’ll lose access to government-exclusive initiatives, such as those loan forgiveness programs.

Of course, keeping your college budget intact and living like a student even after leaving school can also help you avoid student loans by paying them down as fast as possible.

Ben Luthi contributed to this report.

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N/A7Undergraduate
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* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.

1 Important Disclosures for College Ave.

CollegeAve Disclosures

College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.

Rates shown are for the College Ave Undergraduate Loan product and include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.

This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary. This informational repayment example uses typical loan terms for a first year graduate student borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 7.10% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $141.66 while in the repayment period, for a total amount of payments of $16,699.21. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.

Information advertised valid as of 11/24/2021. Variable interest rates may increase after consummation. Approved interest rate will depend on the creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of full principal and interest payments with the shortest available loan term.


2 Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.

3 Rate range above includes optional 0.25% Auto Pay discount. Important Disclosures for Earnest.

Earnest Disclosures

  1. Rates include 0.25% Auto Pay Discount
     
  2. Explanation of Rates “With Autopay” (APD)
    Rates shown include 0.25% APR discount when client agrees to make monthly principal and interest payments by automatic electronic payment. Use of autopay is not required to receive an Earnest loan.

    Available Terms
    For Cosigned loans – 5, 7, 10, 12, 15 years. 
    Primary Only – 10, 12, 15 years

    In school deferred payment is not available in AL, AZ, CA, FL, MA, MD, MI, ND, NY, PA, and WA).


4 Important Disclosures for Ascent.

Ascent Disclosures

Ascent loans are funded by Bank of Lake Mills, Member FDIC. Loan products may not be available in certain jurisdictions. Certain restrictions, limitations; and terms and conditions may apply. For Ascent Terms and Conditions please visit: AscentFunding.com/Ts&Cs.

Rates are effective as of 10/01/2021 and reflect an automatic payment discount of either 0.25% (for credit-based loans) OR 1.00% (for undergraduate outcomes income-based loans). Automatic Payment Discount is available if the borrower is enrolled in automatic payments from their personal checking account and the amount is successfully withdrawn from the authorized bank account each month. For Ascent rates and repayment examples please visit: AscentFunding.com/Rates.

1% Cash Back Graduation Reward subject to terms and conditions, please visit AscentFunding.com/Cashback. Cosigned Credit-Based Loan student borrowers must meet certain minimum credit criteria. The minimum score required is subject to change and may depend on the credit score of your cosigner. Lowest APRs are available for the most creditworthy applicants and may require a cosigner.


5 Important Disclosures for SoFi.

Sofi Disclosures

UNDERGRADUATE LOANS: Fixed rates from 2.99% to 10.66% annual percentage rate (“APR”) (with autopay), variable rates from 0.95% to 11.18% APR (with autopay). GRADUATE LOANS: Fixed rates from 4.08% to 10.90% APR (with autopay), variable rates from 1.00% to 11.29% APR (with autopay). PARENT LOANS: Fixed rates from 4.23% to 10.66% APR (with autopay), variable rates from 1.15% to 11.18% APR (with autopay). For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. Interest rates for variable rate loans are capped at 13.95%, unless required to be lower to comply with applicable law. Lowest rates are reserved for the most creditworthy borrowers. If approved for a loan, the interest rate offered will depend on your creditworthiness, the repayment option you select, the term and amount of the loan and other factors, and will be within the ranges of rates listed above. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Information current as of 11/01/2021. Enrolling in autopay is not required to receive a loan from SoFi. Loans originated by SoFi Lending Corp. or an affiliate (dba SoFi), licensed by the Department of Financial Protection and Innovation under the California Financing Law License No. 6054612. NMLS #1121636 (www.nmlsconsumeraccess.org).


6 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

Undergraduate Rate Disclosure: Variable interest rates range from 1.03% – 11.01% (1.03% – 10.24% APR). Fixed interest rates range  from 3.23% – 11.70% (3.23% – 10.83% APR).

Graduate Rate Disclosure: Variable interest rates range from 1.89% – 10.66% (1.89% – 10.41% APR). Fixed interest rates range from 4.64% – 11.23% (4.64% – 10.95% APR).

Business/Law Rate Disclosure: Variable interest rates range from 1.89% – 9.22% (1.89% – 8.50% APR). Fixed interest rates range from 4.24% – 9.74% (4.24% – 9.02% APR).

Medical/Dental Rate Disclosure: Variable interest rates range from 1.89% – 8.02% (1.89% – 7.72% APR). Fixed interest rates range  from 4.18% – 8.54% (4.18% – 8.24% APR).

Parent Loan Rate Disclosure: Variable interest rates range from 1.97%-7.06% (1.97%-7.06% APR). Fixed interest rates range from 4.55%-7.58% (4.55%-7.58% APR).

Bar Study Rate Disclosure: Variable interest rates range from 4.44% – 9.58% (4.44% – 9.52% APR). Fixed interest rates range  from 7.39% – 12.94% (7.39% – 12.82% APR).

Medical Residency Rate Disclosure: Variable interest rates range from 3.53% – 7.03% (3.53% – 6.75% APR). Fixed interest rates range from 6.99% – 10.49% (6.97% – 10.08% APR).

Variable Rate Disclosure: Variable Rates advertised are based on the one-month London Interbank  Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business  day, of the preceding calendar month. As of November 1, 2021, the one-month LIBOR rate is 0.09%.  Variable interest rates will fluctuate over the term of the loan with changes in the LIBOR rate, and will  vary based on applicable terms, level of degree and presence of a co-signer. Your final variable rate may  be based upon the 30-day average SOFR index, as published by the Federal Reserve Bank of New York.  The maximum variable rate is the greater of 21.00% or Prime Rate plus 9.00%.

Fixed Rate Disclosure: Fixed rate ranges are based on applicable terms, level of degree, and presence of a co-signer.

Lowest Rate Disclosure: Lowest rates are only available for the most creditworthy applicants, require a  5-year repayment term, immediate repayment, a graduate or medical degree (where applicable), and  include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the  Loyalty Discount and Automatic Payment Discount disclosures. Rates are subject to additional terms and  conditions, and are subject to change at any time without notice. Such changes will only apply to  applications taken after the effective date of change.

Federal Loan vs. Private Loan Benefits: Some federal student loans include unique benefits that the borrower may not receive with a private student loan, some of which we do not offer.  Borrowers should carefully review federal benefits, especially if they work in public service, are in the military, are considering possible loan forgiveness options, are currently on or considering income based repayment options or are concerned about a steady source of future income and would want to lower their payments at some time in the future. When the borrower refinances, they waive any current and potential future benefits of their federal loans. For more information about federal student loan benefits and federal loan consolidation, visit http://studentaid.ed.gov/. We also have several resources available to help the borrower make a decision on our website including Should I Refinance My Student Loans? and our FAQs. Should I Refinance My Student Loans? includes a comparison of federal and private student loan benefits that we encourage the borrower to review.

Eligibility Criteria: Applicants must be a U.S. citizen, permanent resident, or eligible non-citizen with a creditworthy U.S. citizen or permanent resident co-signer. For applicants who have not attained the age of majority in their state of residence, a co-signer is required. Citizens Bank reserves the right to modify eligibility criteria at any time. Citizens Bank private student loans are subject to credit qualification, completion of a loan application/Promissory Note, verification of application information, and if applicable, self-certification form, school certification of the loan amount, and student’s enrollment at a Citizens Bank participating school.

Loyalty Discount Disclosure: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower or their co-signer (if applicable) has a qualifying account in existence with us at the time the borrower and their co-signer (if applicable) have submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, or other student loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI, and VT and some products may have an associated cost. This discount will be reflected in the interest rate disclosed in the Loan Approval Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.

Automatic Payment Discount Disclosure: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount.


7 Important Disclosures for Funding U.

Funding U Disclosures

Offered terms are subject to change. Loans are made by Funding University which is a for-profit enterprise. Funding University is not affiliated with the school you are attending or any other learning institution. None of the information contained in Funding University’s website constitutes a recommendation, solicitation or offer by Funding University or its affiliates to buy or sell any securities or other financial instruments or other assets or provide any investment advice or service.