A Guide for College Students
How to Get A Degree Without Debt
As the cost of college soars, the idea of getting a degree without accumulating a huge amount of debt seems impossible, except to those lucky enough to have rich parents or exceptional talent in academics, athletics or arts to win a rare free ride.
The good news is with prudent planning, it's still possible to keep your debt burden to manageable levels. Below you will find strategies and tactics that can bring you closer to your goal of graduating without debt — or with very little debt.
By the Numbers: Soaring Student Debt
Alternative Ways to Pay for College
The first step to minimize your student loan debt is to explore all other options to help pay for your school before you borrow money. Here are some common and uncommon sources of funds to pay for your college expenses.
Seek Grants and Scholarships
Grants and scholarships are gifts provided by an organization for you to use toward school tuition or other educational costs. Unlike with student loans, you have no obligation to repay any grant or scholarship you receive. The federal and state governments also award grants and scholarships. One well-known generous subsidy comes in the form of the federal Pell Grant. This need-based award is worth up to $6,195 for the 2019-2020 school year. Students from families with substantial financial need (i.e. gross incomes of less than $50,000) are the main recipients of Pell Grants. Grant money is also targeted to students with specific career plans or family circumstances: for instance, the federal government has grants for prospective teachers who agree to spend at least four years working in low-income schools, as well as to children of soldiers killed in Iraq and Afghanistan.
In addition to grants from Uncle Sam and the states, billions of dollars of private scholarships are awarded each year, according to the National Postsecondary Student Aid Society. Private scholarships support a wide variety of causes, so you can probably find a scholarship targeting your situation. Organizations grant scholarships based on certain qualifying conditions, including student majors, disabilities and residency. You can also find scholarships for women, veterans, and minorities, among others.
Winning a scholarship depends as much on luck as on skill, says financial aid expert Mark Kantrowitz, former senior vice president and publisher of Edvisors.com. He advises that you apply for as many as possible to increase your chances of winning. You can also boost your odds by seeking out smaller scholarships and essay contests. One caveat, though: Ask if your school might reduce your financial aid package by the amount of any outside scholarships you win. "Thus if you hunt down an obscure scholarship for red-haired flutists, it will often not really do you any monetary good," writes Kalman Chany, Campus Consultant's founder and president, in the book Paying for College Without Going Broke.
Check out our scholarship search to find scholarship and grant programs based on your specific needs.
Website sponsored by the U.S. Department of Labor.
Information about federal student grant programs.
Financial Aid Benefits for Veterans
Veterans of the U.S. military are uniquely eligible for generous benefits from Uncle Sam. If you served on active duty after the Sept. 11 terror attacks and were honorably discharged, you may qualify for the Post-9/11 GI Bill®. This benefit provides up to $24,476.79 for annual tuition, plus money for housing and books. If your tour ended before 9/11, you might qualify for the Montgomery GI Bill, which can give veterans as much as $50,000 or more for tuition over several years. These are just two of the many grants and education assistance programs available to veterans.
Additionally, purchasing a home versus renting can save you hundreds of dollars, and as a veteran student, you typically have easier lending options with a VA home loan, such as no down payment or minimum credit score, 100 percent cash out refinance, and more.
Get Creative: Crowdfund Your Education
Crowdfunding's rising popularity and mainstream acceptance are giving cash-strapped students a new way to raise money for their tuition and educational costs. Typically conducted online, crowdfunding allows students to seek out small cash donations from many individual contributors. With many individual donations put together, students can amass large enough sums to pay for school costs, thus avoiding or minimizing their student loan amounts. With an effective online pitch, you can persuade friends, family members, and even strangers to contribute to your cause — in this case, your education.
Numerous donation-based crowdfunding websites are available. A theater student at Sarah Lawrence College brought in $8,000 on Indiegogo.com. An engineering student at Cornell University raked in $14,000 on GoFundMe.com. watch out, though: Crowdfunding sites take cuts of up to 9 percent, and payment processing can add another 3 percent. Additionally, some popular crowdfunding sites prohibit student-funding campaigns.
Two of the main sites that permit student campaigns are GoFundMe and Indiegogo:
This site says it has helped fundraisers bring in more than $1 billion. GoFundMe collects a 2.9 percent payment processing fee plus $0.30 per donation (though they did get rid of their 5% platform fee for U.S. users!).
This site charges a 5 percent fee and tells users to expect payment processing fees of 3 percent.
Hone Your Message
He says the most important part of his campaign was his three-minute video that described his dreams of traveling the world and learning about other cultures while working as a teacher. "People need enough background information to know they want to support you," Renfro says. "The video gives people context." He tried three versions of the video, starting with one that was too light-hearted and another that was too serious, before posting a pitch that struck an effective balance. Renfro also runs a website describing his travels.
Create a Donor Rewards Program
As part of his pitch, Renfro offered rewards. For a $25 donation, he'd send a postcard from wherever he was. For $75, he'd keep $50 and give $25 to a needy family. For $450, he promised to collect souvenirs from his travels and send them to the donor. "You need a good reward system," he says.
Timing Is Everything
Renfro used social media to market his crowdfunding campaign, and he says timing is crucial. "I launched the crowdfunding campaign on my 23rd birthday, and that was a very bad decision," he says. "I was thinking, 'My social media will be blowing up on my birthday.' My social media was blowing up with birthday wishes, but the message got buried."
Other Ways to Pay for College
Grants, scholarships, and crowdfunding may play vital roles in helping to keep you on the road to debt-free or near debt-free graduation. But you can also look to other tools that can promote your financial health. Here are a few more approaches to consider.
Tax Credits & Deductions
Uncle Sam wants to encourage you to get a degree, so it supports your efforts to do so through several education-related tax breaks offered by the IRS. The IRS has designed various tax breaks for students from families with income levels under certain specified amounts. The American Opportunity Tax Credit is worth up to $2,500 a year for four years. Individuals with adjusted gross incomes of less than $80,000 ($160,000 for couples) can take advantage of the full credit. Smaller credits are available for people with higher incomes.
The Lifetime Learning Credit is worth up to $2,000 for people with modified adjusted gross income of less than $64,000 ($128,000 for couples). There is no limit on the number of times you take this credit, and it applies to undergraduate, graduate and professional degree courses.
Employer Tuition Reimbursement
Whether you have already graduated, secured a job or remain on the job hunt, check with your employer or potential employer to see if it offers a tuition reimbursement program. A tuition reimbursement program presents an affordable way to further your education while you are working. Why do certain employers offer the benefit? The strength of the economy's recent job growth means employers are increasingly vying for workers, and tuition reimbursement programs are becoming a common way to attract potential employees to their doors. Employers also find it in their interest to encourage employees to better themselves through education, as a way to add to the depth of knowledge in their workforce. The Society of Human Resources Management says 51 percent of employers pay for undergraduate courses and 49 percent cover graduate studies. The most recently recorded average maximum reimbursement was in the $4,500 range (2015-2016 school year).
Typically an employee seeks the employer's approval to take a given course, pays upfront, then gets a check after finishing the course. Many employers require students to receive at least a B or C in the course to receive reimbursement. Don't count out companies that hire lower-wage workers. Chipotle Mexican Grill, for instance, offers tuition reimbursement to hourly workers. Starbucks grabbed headlines with its Starbucks College Achievement Program, which offers full- and part-time workers full tuition for online courses at Arizona State University. Starbucks employees can choose from 50 majors. Such arrangements are gaining popularity. Health insurer Anthem covers employee tuition for accredited university classes, while Fiat Chrysler has a partnership with Strayer University. Another large employer, PricewaterhouseCoopers, has reported that they've covered upwards of $25 million in employee student loan debt.
You may be able to reduce your student loan debt by securing a federal work-study job organized by your school's financial aid office. Awarded based on need, these part-time positions include both on-campus and off-campus jobs. Off-campus jobs typically take the form of community service positions with nonprofits or government agencies, through which you earn the federal minimum wage. You'll find two big advantages of a work-study pay: Unlike private-sector part-time jobs, your work-study earnings won't affect your eligibility for financial aid. These jobs are also designed to mesh with student schedules, so you shouldn't have to worry about choosing between a work shift and a class lecture. Applying early for a work-study position is also to your advantage because the number of work-study positions is limited.
Independent Part-Time Jobs
Waiting tables, lifeguarding, and working retail are time-tested ways for students to pay down some of their college costs. Alas, wages for these low-skill jobs haven't kept pace with college tuition increases, so part-time pay doesn't go as far as it once did. The upside is that juggling work and school can teach responsibility and time-management skills. The other side of the coin means that working long hours can leave you with inadequate time to attend class and fit in exam-preparation hours. Another caveat: Students who work can make up to $6,660 a year, at which point additional compensation factors into their financial aid eligibility amounts. In other words, the calculations quickly grow complicated, and you'll have to gauge the costs and benefits of part-time work. Earning too much will reduce the amount of financial aid you receive.
Colleges With Free Tuition
The number of schools that offer free tuition is dwindling as a result of financial difficulties. A few no-fee alternatives remain, although these tuition-free schools tend to be extremely selective.
School Name (Location)
Acceptance Rate (as a percentage)
Berea College (Berea, KY)
Small liberal arts school
College of the Ozarks (Point Lookout, MO)
A work-based Christian liberal arts school
Macauley Honors College at CUNY (New York City, NY)
Branch of the City University of New York, limited to state residents. Students are responsible for fees.
U.S. Air Force Academy (Colorado Springs, CO)
Federal service academy. Students must agree to serve for five years as an officer. For pilots, commitment is doubled to 10 years.
U.S. Coast Guard Academy (New London, CT)
Federal service academy. Students must agree to serve for five years as officer. In addition to free tuition, students are provided a zero-interest loan that covers uniforms, books, and other expenses.
U.S. Military Academy (West Point, NY)
Federal military service academy. Students must agree to several years of active duty.
U.S. Naval Academy (Annapolis, MD)
Federal naval academy. Midshipmen pay no tuition but must serve for five years in Navy or Marines.
7 Tips to Reduce College Costs
Start a College Savings Plan
If you or your family can, plan ahead to reduce your college costs by regularly saving for educational costs in a college savings plan. The sooner you start, the better, but it's never too late to create a college savings fund, and if you can start one with compounding interest you can grow the savings more quickly over time. If your parents have the means, they can help you minimize your student-loan burden.
The tax advantages of these plans are similar to Roth IRA retirement plans: You receive no tax deduction for contributing to the plan, but the money grows tax free, so that future withdrawals don't incur income taxes as long as the proceeds are used for college expenses, including tuition, fees, books, and room and board. No income limits for 529 contributions exist, but the IRS does limit contributions to $14,000 for each beneficiary for gift tax purposes. These 529 plans often carry market risk, unless the plan is a 529 prepaid tuition plan, which states generally insure.
Take Online Courses to Reduce Expenses
The accessibility of quality online college programs and courses creates new levels of flexibility, particularly for nontraditional students who juggle courses, work obligations, and family responsibilities. Because online courses typically eliminate the need to show up in person for lectures, students can significantly reduce commuting costs and tailor their workload to their selected.
Massively open online courses, or MOOCs, show promise in opening up high-level classes to the masses. As online courses that are accessible to virtually anyone, with no limit on participation numbers, MOOCs have the potential to create meaningful cost-savings for students as the business models for these courses develop further and become increasingly popular. You can use MOOCs as a learning aid or catch-up tool, Kantrowitz says. Recently, some have also become recognized and accepted by educational institutions as a means to a formal degree.
Live At Home or in a City With a Low Cost of Living
If you're attending school close to home, living with your parents might be an option. "I am a proponent of living on campus. The college experience is not just sitting in class; it's the other students," says financial aid expert Kantrowitz.
If you're going away, keep in mind that housing costs vary widely. Every ambitious student dreams of attending Harvard, Stanford or Columbia, but in addition to their steep tuitions, the locales of these schools and many other competitive institutions demand that you pay into some of the nation's highest housing prices. You may want to consider many well-regarded state universities — including the University of Florida, University of Illinois, University of Michigan, University of North Carolina, and University of Wisconsin — whose college town locations carry comparatively lower living costs. MoneyGeek.com's Cost of Living Calculator lets you compare your likely expenses in hundreds of U.S. cities side-by-side.
As a renter, it’s important to insure your valuables and it’s possible to do so affordably. Learn more about renters insurance and how to get the best bang for your buck with MoneyGeek’s Renters Insurance guide.
Buy Discounted Books
If tuition seems sky-high, textbook prices are surprisingly eye-popping. It's not unusual for a single textbook to cost more than $200. Take the typical eight courses per school year, and you're looking at a $6,400 price tag to satisfy the required reading for a four-year undergraduate degree. Consider these cheaper alternatives:
Chegg.com rents textbooks
CampusBooks.com rents textbooks, as well as sells and buys used books
Borrowd.co touts itself as the Uber of textbooks. Its app lets students rent books from other students. Borrowd founder Daniel Mall offers the example of a University of South Florida student who wanted to sell his calculus book to the university bookstore but was offered only $5. Instead, he rented the book to another student and collected $25.
These upstarts are in addition to the usual suspects. Don't neglect to peruse Amazon.com for new books and Half.com for used books. Amazon.com's subsidiary, Warehouse Deals, rents out books.
Buy Discounted Computers
Tuition, books and room and board aren't the only expenses you incur as a student. A computer is a near-necessity. To help offset the cost of buying a computer, some online colleges are offering free or discounted laptops to incoming students. Many manufacturers and retailers also offer student discounts, although they tend not to be especially generous and their terms are often difficult to understand.
Here's a quick rundown:
Apple Store for Education
Buy a Mac computer for school-use and Apple may give you a gift card to its app store. You can locate details about its special education pricing online.
Best Buy College Student Deals
The retailer has offered a variety of college student deals, such as $50 off a Mac computer.
The retailer offers student discounts and reward points, as well as periodic special sales to students.
HP offers special discounts through its student store.
The maker of ThinkPads often offers some percentage off for students and teachers.
Microsoft Education Store:
Microsoft offers discounts of 10 percent or more.
Sony Education Store
Sony offers students who register with the company up to 10 percent off certain items.
Get a Budgeting Tool
Focusing too much on your budget while in school can detract from your academic success and achievements. The last thing you want to think about with the exam period looming ahead is whether you've gone over budget with your grocery budget. You have enough on your hands tracking class times, coursework, papers and exam dates.
Here are five sites that offer free budgeting tools, including cool charts and graphics, that can help you more easily manage where your money goes:
Mint.com This money management site tracks your bills, lets you create a budget and sends reminders when payments are due.
YouNeedABudget.com This budget tool lets you record purchases on your iPhone or Android device at the register.
BudgetTracker One of the selling points of this site is that it doesn't require you to share bank account information.
Budgetpulse Another site that doesn't require bank info, Budgetpulse offers tools to help you track expenses.
moneyStrands In addition to tracking your purchases, this site will help you create an annual budget.
Manage Your Credit Card Spending
Charging books, groceries, and outings to your first credit card is a quick solution to unforeseen or necessary expenses, but it’s also an easy way to rack up debt. It is possible to use your credit wisely to help cover college expenses, but it’s important to know how to manage your spending.
Additional Financial Aid Resources
Free Application for Federal Student Aid
The Free Application for Federal Student Aid (FAFSA) is the starting point for just about every request for grants and loans, so gaining familiarity with the FAFSA is essential. Part of the U.S. Department of Education, Federal Student Aid manages the programs that annually provide more than 13 million students with grants, loans, and work-study funds.
College Affordability & Transparency Center
Looking to compare college costs? This U.S. Department of Education site ranks colleges and universities by tuition costs and net prices in its effort to promote transparency. It reports on the highest and lowest full-time student charges for each institutional category — such as private for-profit institutions and public four-year institutions. You can also use the site to compare costs for specific career or vocational programs and the institutions that offer them.
U.S. Department of Education
Uncle Sam offers information about student loans, grants and work-study programs on its U.S. Department of Education site. You can also look up relevant federal laws affecting education.
Want to become a teacher? If you've already made a decision to pursue this career path, you can look up information for relevant grants devoted to teachers on the U.S. Department of Education's TEACH Grant site.
The U.S. Department of Labor's CareerOneStop provides a convenient search tool to identify private scholarships from more than 8,000 available scholarships. You can specify the parameters to suit your conditions, such as award type, residency, level of study and affiliations. You can also find a validated database of scholarships on MoneyGeek.com.
Graduating Debt Free: Questions & Answers
Mark Kantrowitz, a financial aid expert and former senior vice president and publisher of Edvisors.com, offers his thoughts on navigating the college debt maze.
Is it possible to graduate from college with no debt?
The idea that you can graduate with no debt is, I think, the wrong question to ask. The person who is graduating with no debt is either someone with affluent parents, or someone who wins gobs of private scholarships, or someone who has saved significant amounts of money. There is no magic wand you can wave.
When I was in school, I won a gazillion dollars of scholarships because I was a math prodigy. That's very rare. Only 0.3 percent of students win a completely free ride. It happens, but they're at the top of their field. They got the highest score on a national math test, or they won an Intel science prize. More than two-thirds of bachelor's degree recipients graduate with student loan debt. Most students are going to need college aid. Grants have not kept pace with costs, and family income has been flat, so either students go to lower-cost colleges or they borrow. So the question should be how to graduate with as little debt as possible.
Let me rephrase the question. How do you graduate with as little debt as possible?
Going to an in-state public college is one of the best ways to graduate without debt. Of the students who graduate with no debt, almost all of them are going to colleges that cost less than $8,000 a year, and those are mostly two-year colleges. That's fine if you're trying to get a two-year vocational degree. But if your goal is a bachelor's degree, taking a detour through a two-year college may mean that you never reach your destination. If you're willing to serve in the U.S. Armed Forces, the military academies are a great way to get a free, high-quality education.
What about working? How much should the student contribute to the tab?
It's not possible these days to work your way through college. Students who work full time while they're in college are half as likely to graduate. Students who work can make up to a limit of $6,660 a year before their financial aid is reduced. Work-study is excluded from that. If a student has a job, you're going to be paying taxes on it, so it does reach a point of diminishing returns.
How much debt is a reasonable amount to take on?
The rule of thumb is your total debt at graduation should be less than your annual starting salary. That means you should be able to repay your debt in 10 years. Anything more than that, and you're going to struggle to repay.
So if I will earn $45,000 as a teacher, I should limit my loans to $45,000?
Teaching is an exception, because there's [the] Public Service Loan Forgiveness [Program], so long as Congress doesn't eviscerate it. You can get public service loan forgiveness if you're a teacher, a public librarian, a member of the U.S. Armed Forces, working for government, or as a police officer, a firefighter or EMT. If you want to be a public defender or prosecutor, law school becomes possible because of public service loan forgiveness.
Are there certain majors that lend themselves to larger or smaller debt loads?
If you want to be a neurosurgeon, you can take on a lot of debt, because you're going to make a six-figure salary that allows you to pay it back. For fields like ethnomusicology or history or anthropology, they're intellectually stimulating, but they don't come with a lot of job opportunities. If you want to follow your passion and major in music, maybe you double major or you minor in a subject that can help you pay the rent. You're getting a degree in art? Learn D-based programming or graphic design so you can design websites for very good money, and then work on your art at night. If you have a double major, you need to plan your path. If you finish one bachelor's degree, you'll lose your eligibility for the Pell Grant for additional courses. So make sure you don't take the final class for each major until your final semester.
What's the most common mistake students and parents make when choosing a college?
Usually, they're chasing a dream, and the cost doesn't factor in until it's too late. There are two concepts to consider. The net cost is the cost of attendance minus gift aid that doesn't need to be repaid. The net price is the cost of attendance minus the entire financial aid package. If the financial aid package includes loans, then the net cost gives a more accurate reflection of your actual cost. Loans just spread out the cost over time. By focusing on the net price instead of the net cost, parents and students are getting bad information about how much that education is going to cost.
Textbook prices are shocking. Any advice for saving money on books?
Buy used textbooks, and sell your textbooks at the end of the semester. Take the ISBN — which is required to be included on the syllabus — and go on Amazon[.com] and look for it. The professor may have an evaluation copy of the book and be willing to share it; ask the professor. There may be a reserve copy of the book in the library, but be warned that some students will game the system by reshelving the book in the wrong place. If you have a roommate who's in the same class, you might be able to share the books, or if you're in a fraternity or sorority, you could pool resources to share books. Electronic textbooks don't save you all that much money. Buying an earlier edition of the textbook can save you some money, but the page numbers might not match up. Make sure you read the textbook before the class; that really helps you integrate the learning.
How do you teach students to control their spending while they're in school?
Live like a student now so you don't have to live like a student later. Delayed gratification is very difficult to learn, even for adults. But consider this: For every $1 you borrow, by the time you pay back that debt, it will cost $2. Instead of buying the stuff now, wait until after you graduate.
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