Updated: September 10, 2024
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In 2021, the average student loan debt in the U.S. was $37,693. As the cost of college continues to skyrocket, the prospect of obtaining a degree without accumulating substantial debt may seem daunting. However, graduating debt-free is within reach if you start planning early. With careful planning, informed decision-making and a comprehensive understanding of available resources, you can pursue your degree while managing your debt burden effectively. Below you will find strategies and tactics that can bring you closer to your goal of graduating without the burden of student debt.
By the Numbers: Soaring Student Debt
Student debt is a significant concern in the United States. This financial burden can greatly impact a graduate's life choices, making it crucial to explore ways to minimize or eliminate this debt.
Approximately 43.6 million Americans carry student debt, accounting for one-sixth of the adult population.
Outstanding student loan debt reached nearly $1.77 trillion in 2023, as per Federal Reserve data.
Fifty-four percent of bachelor's degree recipients from public and private nonprofit four-year colleges and universities in the class of 2021 graduated with an average debt of $29,100.
Despite having fewer borrowers, the 35 to 49 age group has the highest total loan debt at $535.2 billion.
Women generally borrow more for their education. On average, women who earn their bachelor’s degree owe $2,700 more than men upon graduation.
Women take approximately two years longer to pay off student loans than men, which may be attributed to factors such as the gender pay gap.
Ways to Pay for College Without Loans
Student loans are one of many options when considering how to pay for college. From using savings plans and choosing affordable schools to taking advantage of financial aid opportunities and earning income, you have a variety of available tools. Explore the following sources of funds and strategies before deciding to borrow money.
1. Start Saving Long Before College
Starting your financial planning for college early can make a significant difference in managing your education costs. Kick-start your savings as soon as possible and enroll in programs that allow you to earn college credits in high school.
Start a College Savings Plan
Starting a college savings plan early can significantly reduce the need for loans. Consider a 529 plan, a tax-advantaged savings plan designed for future education costs, offering benefits like tax-free growth and withdrawals for qualified expenses. As a student, you can contribute to your own plan, and once you become of legal age, you can take control of the 529 plan. You can also open a bank account and start saving from part-time work. Many banks offer youth accounts for those under 18.
Earn College Credit Early
You can lower the overall cost of a degree by earning college credit early. One way to achieve this is through dual enrollment courses, which let high school students take actual college courses and get college credit during high school. Another strategy is Prior Learning Assessments (PLAs), which provide college credits for knowledge and skills gained outside the classroom, such as work experience or self-study. Advanced Placement (AP) courses are a popular form of PLA, allowing high school students to take college-level courses and earn credits if they perform well on the AP test. Taking dual enrollment and PLAs together can potentially help you save thousands of dollars and graduate in less time once you reach college.
2. Look for Affordable Schools
The choice of school plays a significant role in managing your college expenses. There are various factors to consider when choosing a school, but if you want to graduate debt-free, it's important to consider affordability when making this decision. Here are some affordable school alternatives to consider to help keep your debt low.
In-State Public University
In-state public universities often offer lower tuition rates for state residents. This can be a cost-effective option for students who want a four-year degree without the high price tag of out-of-state or private universities. Researching and comparing the tuition rates and financial aid opportunities at different in-state public universities is important to find the best fit for your budget and educational goals.
Community College
Starting at a community college and later transferring to a four-year institution can significantly reduce overall college costs. Community colleges typically have much lower tuition rates than four-year colleges and universities. Students can often complete their general education requirements at a community college and then transfer those credits to a four-year institution to complete their degree.
Online College
Online programs can offer more flexibility and lower costs than traditional on-campus programs. They eliminate the need for commuting or relocating, which can save a significant amount of money. Many online programs offer asynchronous classes, allowing students to work part-time or full-time while earning their degree. Ensure the online program is accredited and that the credits will be recognized by employers or other educational institutions if you plan to transfer.
3. Explore Financial Aid Options
Financial aid is crucial in making college affordable and minimizing student loans. Various options exist, from scholarships and grants to work-study programs and military benefits. A key step in accessing these resources is filling out the Free Application for Federal Student Aid (FAFSA), which can qualify you for a wide range of financial aid options.
Scholarships and Grants
Scholarships and grants are invaluable sources of financial aid that don't require repayment, making them ideal for funding your education. Scholarships are often merit-based, rewarding academic or athletic achievements, while grants are primarily need-based. The federal government offers grants like the Pell Grant for students with substantial financial need. This need-based award is worth up to $7,395 for the 2023-24 school year. Grant money is also targeted at students with specific career plans or family circ*mstances.
In addition to grants from the government and states, billions of dollars in private scholarships are awarded to students each year. Private scholarships cover many causes, so you can likely find one that aligns with your situation. Organizations grant scholarships based on various qualifying conditions, including student majors, disabilities and residency. Scholarships are available for women, veterans, minorities and other specific groups, providing vital support for students seeking higher education.
MONEYGEEK EXPERT TIP: SCHOLARSHIPS
According to financial aid expert Mark Kantrowitz, former senior vice president and publisher of Edvisors.com, winning a scholarship can be as much a matter of luck as it is of skill. To improve your chances of success, he advises applying for as many scholarships as possible. Seeking out smaller scholarships and essay contests can boost your odds.
NEED HELP FINDING A SCHOLARSHIP?
Check out MoneyGeek’s scholarship resources to find scholarship and grant programs based on your specific needs.
- Scholarships and Grants for Black Students
- Scholarships and Grants for Hispanic Students
- Scholarships and Grants for Asian Students
- Scholarships and Grants for Native Americans
- Scholarships and Grants for Students With Disabilities
Military Benefits
If you're a current or former member of the military or a dependent of one, you may be eligible for education benefits through the Department of Veterans Affairs (VA). If you served on active duty after the September 11, 2001, terror attacks and were honorably discharged, you may qualify for the Post-9/11 GI Bill. This benefit provides up to $26,381 for annual tuition plus money for housing and books. If your tour ended before 9/11/2001, 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.
Tax Credits and Deductions
The U.S. government offers several education-related tax breaks through the IRS to support individuals pursuing a degree. Families with income levels below specific thresholds can benefit from various tax credits. The American Opportunity Tax Credit provides up to $2,500 per year for four years, available to individuals with adjusted gross incomes below $80,000 ($160,000 for couples). Smaller credits are available for higher-income individuals.
Additionally, the Lifetime Learning Credit offers up to $2,000 for those with modified adjusted gross income below $64,000 ($128,000 for couples). Unlike the American Opportunity Tax Credit, there's no limit on the number of times you can claim this credit, and it applies to undergraduate, graduate and professional degree courses. These tax breaks aim to encourage individuals to pursue higher education and ease the financial burden of college expenses.
Employer Tuition Reimbursem*nt
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 reimbursem*nt program. A tuition reimbursem*nt program presents an affordable way to further your education while you are working. With the job market becoming increasingly competitive, employers are using tuition reimbursem*nt as a means to attract and retain skilled employees. Employees typically seek approval before enrolling, pay upfront and receive reimbursem*nt after completing the course. Some employers may require a minimum grade to qualify for reimbursem*nt.
4. Earn Extra Money in College
Earning income while attending college can be a practical way to offset education costs and reduce the need for student loans. From on-campus jobs to part-time work or internships related to your field of study, there are various opportunities to earn while you learn. Balancing work and study requires good time management, but it can provide financial benefits and valuable work experience.
Work-Study Programs
Reduce your student loan debt by securing a federal work-study job through your school's financial aid office. These part-time positions, based on financial need, are available both on-campus and off-campus, often in community service roles with nonprofits or government agencies, paying the federal minimum wage. The benefits of work-study pay are twofold: it doesn't impact your financial aid eligibility like private-sector part-time jobs, and it accommodates student schedules, avoiding conflicts with classes. 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. Students who work can make up to $6,660 a year without affecting their financial aid eligibility. In other words, earning too much will reduce the amount of financial aid you receive. You'll have to gauge the costs and benefits of part-time work.
Internships
Internships are work-experience programs that allow you to gain practical experience in your field of study. They can be paid or unpaid, and some offer academic credit. Internships can be an excellent way to put classroom learning into practice in real-world scenarios.
However, some internships are unpaid, which won't help with immediate college costs, and they may require a significant time commitment, which can interfere with classes or study time. Despite these potential challenges, internships provide opportunities to network with professionals in your field, which can be beneficial when you're ready to start your career. Some internships may even lead to job offers after graduation.
Crowdfund Your Education
The growing popularity and acceptance of crowdfunding 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. By pooling together these individual donations, students can amass large enough sums to pay for school costs. With an effective online pitch, you can persuade friends, family members and even strangers to contribute to your cause — in this case, your education.
MONEYGEEK EXPERT TIP: CROWDFUNDING
Numerous donation-based crowdfunding websites are available; however, it's essential to be cautious. Crowdfunding sites take cuts of up to 9%, and payment processing can add another 3%. Additionally, some popular crowdfunding platforms restrict student-funding campaigns.
Two of the main sites that permit student campaigns are GoFundMe and Indiegogo:
- GoFundMe.com: This site claims to have helped fundraisers bring in over $1 billion. Although GoFundMe no longer charges its 5% platform fee for U.S. users, it still collects a 2.9% payment processing fee plus $0.30 per donation.
- Indiegogo.com: Indiegogo charges a 5% fee and advises users to expect payment processing fees of 3%.
Practical Strategies to Minimize College Costs
While exploring different ways to fund your college education is important, it's equally crucial to consider how you can manage and reduce your overall college costs. There are several strategies you can employ to keep your expenses in check. Remember, every dollar saved is a dollar less you need to borrow or earn.
Buy Used Textbooks or Rent Them
Textbooks can be a significant expense, with some costing over $200 each. For a four-year undergraduate degree with eight courses per school year, this could amount to a staggering $6,400 just for required reading. Consider buying used books or renting them from websites like Amazon, Chegg, CampusBooks.com, Borrowd.co and BookFinder. Some colleges also have textbook exchange programs, where you can purchase used books from fellow students, further reducing the burden of textbook expenses.
Buy Discounted Computers
Some online colleges offer free or discounted laptops to incoming students, helping to alleviate this expense. Well-known manufacturers and retailers like Apple, Dell, HP, Lenovo and Microsoft also provide student discounts, although they may not be overly generous, and their terms can be difficult to understand. Remember to have your student ID or other proof of enrollment ready when making a purchase.
Live at Home or in a City With a Low Cost of Living
If your school is close to home, living with your parents might be an option. However, if you're going away, note that housing costs can vary widely. Consider exploring well-regarded state universities like the University of Florida, University of Illinois, University of Michigan, University of North Carolina and University of Wisconsin, as their college town locations often offer comparatively lower living costs. Use MoneyGeek's Cost of Living Calculator to compare expenses in hundreds of U.S. cities.
Maximize Your Course Load
Many colleges charge a flat tuition fee for full-time students, regardless of the number of courses. If you can handle the workload, taking more classes each semester can help you graduate earlier and save money. For example, if your college charges the same tuition for 12 and 18 credit hours, consider taking 18 credit hours if you can manage it.
Manage Your Credit Card Spending
It's easy to overspend with a credit card. If you decide to use a credit card during college, use it responsibly. Aim to pay off your balance in full each month to avoid interest charges. Also, consider getting a card that offers rewards like cash back or travel points to maximize benefits.
Stick to Your Budget
Creating and sticking to a budget is one of the most effective ways to control college costs. Determine your monthly income and expenses, including tuition, housing, food, books and entertainment. While budgeting is important, avoid becoming overly fixated on it during school to maintain focus on academic success. Use apps and online tools to track spending and stay on budget.
Use Public Transportation
If your school is in a city with good public transportation, consider using it instead of maintaining a car, which can be expensive. Owning a car, including payments, insurance, fuel and maintenance, can easily exceed $700 a month. In contrast, a monthly transit pass in many cities costs less than $100. Using public transportation can save over $20,000 throughout a four-year degree and is more sustainable and environmentally friendly. Many cities offer discounted or free transit passes for students.
Cook Your Own Meals
Eating out can quickly add up. Spending $10 on lunch every day can amount to $50 per week or $200 per month. Over a nine-month school year, that's $1,800 spent on lunches alone. Cooking your own meals can greatly reduce these costs. Spending $50 a week on groceries can cover all your meals and help you save hundreds or even thousands of dollars over your college career. Additionally, cooking can be a stress reliever and a valuable life skill. Consider meal prepping on weekends to save time during the week.
Colleges Offering Free Tuition
The number of schools offering free tuition has decreased over the years due to financial difficulties, but a few no-fee alternatives still exist. However, they tend to be highly selective. Keep in mind that while the tuition may be free, additional expenses such as room and board, books and fees may still apply, so it's crucial to consider the total cost of attendance.
School Name (Location) | Description | Acceptance Rate |
|---|---|---|
Alice Lloyd College (KY) | Offers free tuition to students from 108 counties in Central Appalachian service area. All students work at least 10 hours a week. | 36% |
Antioch College (OH) | All Pell-eligible students receive full tuition scholarships. Students must maintain at least a 2.0 GPA. | 72% |
Barclay College (KS) | Offers full-tuition scholarships to all full-time students who live on campus. | 54% |
Berea College (KY) | No student pays tuition. The Tuition Promise Scholarship covers remaining tuition costs after other aid. | 33% |
College of the Ozarks (MO) | Full-time students pay no tuition. Part-time students pay per credit hour. | 21% |
United States Air Force Academy (CO) | No tuition or room and board are charged. After graduation, cadets are required to serve in the U.S. Air Force or U.S. Space Force for at least eight years. | 12% |
United States Coast Guard Academy (CT) | Tuition and room and board are free. Postgraduate service for five years is required. | 19% |
United States Merchant Marine Academy (NY) | Students don't pay tuition in exchange for service after graduation. The cost of textbooks, room and board and uniforms are also covered. | 25% |
United States Military Academy (NY) | Tuition and room and board are covered for students. In addition to required military service after graduation, cadets must play on a sports team each semester. | 11% |
United States Naval Academy (MD) | Enrollees receive free tuition and room and board by pledging to serve in the U.S. Navy for five years after graduation. | 8% |
Source: EduRank
Benefits of Graduating Debt-Free
Graduating from college without the burden of student loans can open up a world of opportunities. Without the cloud of debt and countless monthly payments hanging over your head, you can pave the way for a more financially prosperous life.
Financial Freedom
Graduating without student loans offers greater financial flexibility. You can allocate your income to meet your needs and wants without being tied down by monthly loan payments. This could mean being able to afford a nicer apartment, travel more or even just enjoy the peace of mind that comes with having a comfortable savings cushion. You can also start investing earlier, which can lead to significant wealth accumulation over time.
Less Stress
Debt is a large source of stress for many people. It can lead to feelings of anxiety and can even strain personal relationships. By graduating debt-free, you can avoid this stress and enjoy better mental health. This can also have positive effects on other areas of your life, including your physical health and your performance at work.
Career Flexibility
Without the burden of student loan payments, you have more freedom to pursue the career you want. You might choose to work in a field you're passionate about, even if it doesn't pay as much as other jobs. Or, you might decide to start your own business.
Credit Score
Student loans can affect your credit score, which can impact your financial well-being — from your ability to get a credit card to your ability to buy a home. If you graduate without student loans, you can potentially build a better credit score, which can open up opportunities for you and save you money on interest rates.
Emergency Savings
An essential aspect of financial planning is having an emergency fund, which acts as a safety net for unexpected expenses such as car repairs or medical bills, preventing the need to accumulate debt. Graduating debt-free allows you to build this fund more rapidly, providing you with greater financial security.
Retirement Savings
The sooner you start saving for retirement, the more time your money has to grow through compound interest. If you're not making student loan payments, you can start putting money into a retirement account right away. This can lead to a more comfortable retirement and might even allow you to retire earlier than you would otherwise be able to.
Ask the experts:
Let me rephrase the question. How do you graduate with as little debt as possible?
Publisher of PrivateStudentLoans.guru
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.
Frequently Asked Questions
Achieving a debt-free college graduation can be a complex journey, and you may have several questions about how to achieve this. Here are some of the most frequently asked questions about graduating without debt:
What does it mean to graduate debt-free?
Graduating debt-free means completing a college education without the burden of student loans. This can be achieved through a combination of scholarships, grants, personal or family savings, work-study programs or income from part-time work. It means the student has managed to cover their tuition, room and board, books and other college-related expenses without borrowing money that needs to be repaid after graduation.
Is it realistic to graduate debt-free?
Graduating debt-free is achievable, but it requires careful planning, dedication and a bit of luck. The feasibility of graduating without debt depends on several factors, including the cost of tuition, the availability of scholarships and grants, the student's personal or family savings and the student's ability to work part-time or during summers. Although tuition costs are rising, many students still manage to graduate with low or no debt by attending affordable schools, receiving substantial financial aid or working while studying.
Which majors have the least debt?
According to the Education Data Initiative, students graduating from International and Comparative Education with a bachelor's degree have the smallest median debt, totaling $9,530. At the associate's level, Biological and Physical Sciences have the smallest median debt, amounting to $7,590. However, the level of debt a student graduates with depends on the cost of the institution, the availability of financial aid and personal financial circ*mstances. For instance, students attending public in-state institutions typically have less debt than those attending private or out-of-state institutions.
Which major has the most debt?
Degrees in law and medicine often lead to the highest levels of debt. These programs are lengthy, often requiring many years of study beyond a bachelor's degree, and tuition costs are high. However, these degrees also tend to lead to high-paying careers, which can make the debt more manageable over time. Students considering these fields should understand the potential return on investment and plan their finances accordingly.
What is the most expensive career to study?
Medical careers are often the most expensive to pursue due to the extensive education required, including undergraduate studies, medical school and residency programs. Other high-cost fields of study include law, dentistry and veterinary medicine. While these careers require a significant upfront investment, they also tend to lead to high earning potential, which can help offset the cost of education over time. Students should carefully consider the long-term financial implications of pursuing these careers.
Expert Insight on Getting a Degree Without Debt
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?
- Let me rephrase the question. How do you graduate with as little debt as possible?
- What about working? How much should the student contribute to the tab?
- How much debt is a reasonable amount to take on?
- So if I will earn $45,000 as a teacher, I should limit my loans to $45,000?
- Are there certain majors that lend themselves to larger or smaller debt loads?
- What's the most common mistake students and parents make when choosing a college?
- Textbook prices are shocking. Any advice for saving money on books?
- How do you teach students to control their spending while they're in school?
Mark KantrowitzPublisher of PrivateStudentLoans.guru
Additional Resources
- AmeriCorps: AmeriCorps offers education awards that can be used to pay for college or to repay student loans in exchange for community service.
- Cappex: Cappex provides tools for students to search for scholarships, colleges and financial aid opportunities.
- CareerOneStop: CareerOneStop is a U.S. Department of Labor-sponsored website offering a variety of resources to explore careers, find education and training opportunities and access job search strategies and labor market data.
- Chegg: Chegg offers a variety of resources for students, including textbook rentals and online tutoring services, helping reduce the cost of course materials and academic support.
- College Affordability & Transparency Center: This site ranks colleges and universities by tuition costs and net prices in its effort to promote transparency.
- College Greenlight: College Greenlight is a platform that supports first-generation and underrepresented students in their college search and scholarship applications.
- College Scorecard: This website, provided by the U.S. Department of Education, offers data on colleges and universities, including costs, graduation rates and average debt incurred by students. It can help students make informed decisions about where to apply.
- Fastweb: Similar to Scholarships.com, Fastweb is another platform that connects students with scholarship opportunities tailored to their profile.
- Federal Student Aid (FAFSA): The Free Application for Federal Student Aid (FAFSA) is a crucial resource for students seeking financial aid. It determines eligibility for federal grants, work-study programs and loans. Students can complete the FAFSA online at fafsa.gov.
- Finaid.org: This website provides a comprehensive overview of financial aid options, including scholarships, loans and savings plans.
- National Association of Student Financial Aid Administrators (NASFAA): NASFAA provides resources and guidance on financial aid and college affordability.
- National Student Clearinghouse: This nonprofit organization provides educational verification and financial aid services to students and educational institutions.
- SALT: SALT is a free resource that provides financial literacy tools and advice for managing student loans and expenses.
- Scholarships.com: This website helps students search for various scholarships based on their interests, academic achievements and other criteria. It's an excellent tool to find scholarships that can offset college costs.
- StudentAid.gov: This official U.S. Department of Education website provides comprehensive information on federal student aid programs, loan repayment options and financial planning tools.
- TEACH Grant: The TEACH Grant is a federal program offering grants to aspiring teachers in high-need fields who commit to teaching in qualifying low-income schools.
- U.S. Department of Education: The U.S. Department of Education is a federal agency providing information and resources on federal student aid, grants, loans, education data and initiatives to promote access to quality education.
- Your college's financial aid office: Many colleges and universities have dedicated financial aid offices that can provide personalized guidance and resources to help students manage their college expenses effectively.
About Nathan Paulus
Nathan Paulus is the Head of Content Marketing at MoneyGeek, with nearly 10 years of experience researching and creating content related to personal finance and financial literacy.
Paulus has a bachelor's degree in English from the University of St. Thomas, Houston. He enjoys helping people from all walks of life build stronger financial foundations.
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- American Association of University Women. "Women & Student Debt." Accessed July 27, 2023.
- CollegeBoard. "Trends in College Pricing and Student Aid 2022." Accessed July 27, 2023.
- Education Data Initiative. "Student Loan Debt by Major." Accessed July 27, 2023.
- Federal Reserve Bank of New York. "The Labor Market for Recent College Graduates." Accessed July 27, 2023.
- Federal Reserve Bank of St. Louis. "Gender and Racial Disparities in Student Loan Debt." Accessed July 27, 2023.
- Federal Reserve System. "Consumer Credit Outstanding (Levels)." Accessed July 27, 2023.
- Federal Student Aid. "Federal Pell Grants." Accessed July 27, 2023.
- Federal Student Aid. "Federal Student Loan Portfolio." Accessed July 27, 2023.
- Internal Revenue Service. "American Opportunity Tax Credit." Accessed July 27, 2023.
- Internal Revenue Service. "Lifetime Learning Credit." Accessed July 27, 2023.
- U.S. Bureau of Labor Statistics. "Chemical Engineers: Occupational Outlook Handbook." Accessed July 27, 2023.
- U.S. Department of Veteran Affairs. "Montgomery GI Bill Active Duty (Chapter 30) rates." Accessed July 27, 2023.
- U.S. Department of Veteran Affairs. "Post-9/11 GI Bill (Chapter 33) rates." Accessed July 27, 2023.
