As recent college graduates enter the workforce, many of them are saddled with crippling student loan debt. And while student loan forgiveness programs do exist, many Americans do not meet the eligibility requirements for them.
So before you’re stuck looking at a significant student loan balance, consider the following strategy on how to avoid paying student loans by not taking any out in the first place.
How I avoided taking out 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 (BYU), where they only offered me a two-year, half tuition academic scholarship.
Knowing I was on my own for my education costs, I started strategizing how to pay for my education without taking out student loans. Here are a few things I did along the way.
1. I chose an inexpensive college
The biggest costs covered by student loans tend to be your school’s tuition and fees. What’s more, those costs have increased 3.5 percent per year on average over the last decade for public four-year institutions.
In many cases, however, you can find a college nearby that charges below-average tuition while also providing a lot of value. That’s what BYU was to me.
BYU is a private university owned by the Church of Jesus Christ of Latter-day Saints. For the 2017-2018 school year, it charges $5,460 a year in tuition and fees for members of the church and $10,920 a year for non-member students.
Despite the relatively low cost, BYU’s business programs – which are why I transferred – are among the best in the nation.
You may need to do some extra research to find a suitable college with low tuition costs, but the money you’ll save years beyond your graduation will be worth it.
2. I applied for scholarships and grants
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.
Your university isn’t your only source for scholarships either. There are several organizations and companies helping students cover the cost of their education. And don’t forget to apply for the Student Loan Hero $1K Scholarship while you’re at it.
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, which qualified me for a full-tuition academic scholarship after the initial one ended.
Later, after I was married, my wife and I qualified for Pell Grants. The money we received from scholarships and grants covered most of our tuition costs.
3. I found a job
Depending on the program you’re in, your studies may take up a large chunk of your time. Plus, there’s the social aspect of college to consider as well.
Between these two factors, it’s not always easy to find the time to work. If you want to decrease your dependence on debt, though, getting a job goes a long way.
I worked at least 32 hours a week doing customer service for a nutritional supplement company while going to school full-time. The income I earned provided enough cash to cover my living expenses, my 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, this 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.
4. I stuck to a budget
Regardless of how much income you earn, living on a budget can help you manage your cash flow. It can also prevent you from overspending on unnecessary things, which can increase your need for student loans. You can do a monthly budget or one for each semester.
When I began budgeting in college, I used a simple spreadsheet and tracked my expenses manually. Later, I upgraded my spreadsheet by adding formulas that automatically updated the budget when I added new transactions. I planned my expenses for each month and left money for savings.
Now there are plenty of budgeting apps that make the process even easier. You’ll be able to easily keep track of where your money is coming from and where it’s going.
How to avoid paying student loans
Far and away the best way to avoid paying student loans is by not taking out a student loan from the start. Despite all of my efforts, things did change when I married my wife midway through my time at college.
I switched to a part-time schedule at work, our expenses increased, and my wife was in a car accident that left her with some chronic health issues. We also made some mistakes along the way, including paying for a couple of vacations with student loan funds.
In general, though, our habits lessened our need for student loans. I left BYU with $9,133 in student debt. That’s well below the 2012 student loan debt average of $32,300 for graduating students from private nonprofit colleges.
While the student loan crisis is getting lawmakers’ attention, it may take years for meaningful changes to happen in that realm. In the meantime, if you want my advice on how to avoid student debt, it’s this: find ways to sidestep it in the first place.
Need a student loan?Here are our top student loan lenders of 2018!
|1 Important Disclosures for CollegeAve.
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.
2 Important Disclosures for Discover.
3 Important Disclosures for Ascent.
Before taking out private student loans, you should explore and compare all financial aid alternatives, including grants, scholarships, and federal student loans and consider your future monthly payments and income. Applying with a cosigner may improve your chance of getting approved and could help you qualify for a lower interest rate. Ascent Student Loans may be funded by Richland State Bank (RSB) or Turnstile Capital Management, LLC (TCM), which are not affiliated entities. Certain restrictions and limitations may apply. Ascent Student Loan products are subject to credit qualification, completion of a loan application, verification of application information and certification of loan amount by a participating school. All loan products may not be available in certain jurisdictions. Other terms and conditions apply. Ascent is a federally registered trademark of TCM and may be used by RSB under limited license. Richland State Bank is a federally registered service mark of Richland State Bank.
* Application times vary depending on the applicants ability to supply the necessary information for submission.
* 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.
4 = Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
5 Important Disclosures for PNC.
PNC Bank is one of the nation’s largest education loan providers. For over 40 years, PNC has been committed to helping students and their families make possible the adventure of college.
6 Important Disclosures for SunTrust.
Before applying for a private student loan, SunTrust recommends comparing all financial aid alternatives including grants, scholarships, and both federal and private student loans. To view and compare the available features of SunTrust private student loans, visit https://www.suntrust.com/loans/student-loans/private.
Certain restrictions and limitations may apply. SunTrust Bank reserves the right to change or discontinue this loan program without notice. Availability of all loan programs is subject to approval under the SunTrust credit policy and other criteria and may not be available in certain jurisdictions.
SunTrust Bank, Member FDIC. ©2018 SunTrust Banks, Inc. SUNTRUST, the SunTrust logo and Custom Choice Loan are trademarks of SunTrust Banks, Inc. All rights reserved.
7 Important Disclosures for LendKey.
Additional terms and conditions apply. For more details see LendKey
8 Important Disclosures for CommonBond.
A government loan is made according to rules set by the U.S. Department of Education. Government loans have fixed interest rates, meaning that the interest rate on a government loan will never go up or down.
Government loans also permit borrowers in financial trouble to use certain options, such as income-based repayment, which may help some borrowers. Depending on the type of loan that you have, the government may discharge your loan if you die or become permanently disabled.
Depending on what type of government loan that you have, you may be eligible for loan forgiveness in exchange for performing certain types of public service. If you are an active-duty service member and you obtained your government loan before you were called to active duty, you are entitled to interest rate and repayment benefits for your loan.
A private student loan is not a government loan and is not regulated by the Department of Education. A private student loan is instead regulated like other consumer loans under both state and federal law and by the terms of the promissory note with your lender.
If your private student loan has a fixed interest rate, then that rate will never go up or down. If your private student loan has a variable interest rate, then that rate will vary depending on an index rate disclosed in your application. If the interest rate on the new private student loan is less than the interest rate on your government loans, your payments will be less if you refinance.
If you don’t pay a private student loan as agreed, the lender can refer your loan to a collection agency or sue you for the unpaid amount.
Remember also that like government loans, most private loans cannot be discharged if you file bankruptcy unless you can demonstrate that repayment of the loan would cause you an undue hardship. In most bankruptcy courts, proving undue hardship is very difficult for most borrowers.
9 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|3.69% – 10.94%1||Undergraduate, Graduate, and Parents||Visit CollegeAve|
|3.97% – 12.97%3||Undergraduate and Graduate||Visit Ascent|
|4.34% – 12.99%2||Undergraduate and Graduate||Visit Discover|
|4.12% – 10.98%*,4||Undergraduate and Graduate||Visit SallieMae|
|5.03% – 11.23%5||Undergraduate and Graduate||Visit PNC|
|4.00% – 13.00%6||Undergraduate and Graduate||Visit SunTrust|
|4.72% – 9.81%7||Undergraduate and Graduate||Visit LendKey|
|3.72% – 9.68%8||Undergraduate, Graduate, and Parents||Visit CommonBond|
|4.19% – 12.06%9||Undergraduate, Graduate, and Parents||Visit Citizens|