8 ways to get through college debt free

A college education is likely one of the biggest expenses you’ll encounter in life. Whether you’re a student or you’re a parent who’s helping your child pay for college, the price tag you’re facing today is higher than ever — with the average annual cost of college currently at $36,436, according to research from the Education Data Initiative.

Graduating from college without the burden of student loan debt has significant benefits. Instead of making loan payments, you’re in a much better position to start saving for other goals, such as a new house or planned travel. You might also feel freer to pursue a job you’re passionate about instead of needing to take the highest-paying job you can find.

Here we’ll go over eight things you can do to help ensure you’ll be able to start your post-college career with a clean slate, free of debt.

1. Open a college savings account

Parents who open a 529 college savings account early in their child’s life will benefit from the effects of compound interest. Contributions to 529s grow on a tax-deferred basis, and money that’s used for qualifying education-related expenses can be withdrawn tax-free.

A 529 plan can be opened directly through a state’s plan or through a broker. For tax purposes, any money you withdraw should be used on education expenses in the same calendar year. Eligible expenses include tuition, required textbooks, room and board, as well as computers and software.

“It is important to be consistent when contributing to your child’s 529,” says Deacon Hayes, personal finance speaker and president of Well Kept Wallet. “Even if it is only $50 per month, the money adds up. After 18 years of investing, at an 8 percent annualized return, it would come out to a little over $24,000.”

Another place for college savings is a Coverdell education account, which can be tapped into for a broader range of expenses that include things like uniforms and tutors. However, only up to $2,000 can be added to this type of account each year.

2. Take AP and dual-credit courses

As a student, taking advanced placement (AP) and dual-credit courses in high school can shave thousands off your total college bill, and it can also help you graduate early.

Your high school may offer AP courses in subjects including English, Math, Computer Science, Government, Economics, Psychology and History. A test is offered at the end of the course’s duration, and it’s graded on a five-point scale.

You can choose which colleges you wish to send your AP exam results to, and the criteria varies among colleges as to what minimum score you need to be awarded college credit.

Dual-credit courses are those you can take in high school that also provide college credit (often from a community college) to those who earn qualifying grades. You may need to be a junior or senior to be eligible for dual-credit courses, and your school might require you to maintain a certain grade point average (GPA).

3. Find scholarships

Scholarships are typically awarded to students for academic or athletic merit — and the beauty of scholarships is that unlike with loans, they don’t need to be repaid. Colleges often award academic-based scholarships to students who graduated high school with high GPAs or those who scored well on college admissions tests.

Colleges may also award athletic scholarships to exceptional student-athletes who commit to joining the school’s teams, such as for football, basketball, baseball or volleyball.

Other sources of scholarship money can include corporations and foundations. Some scholarships are awarded to students based on their traits or background. For instance, such opportunities exist for minorities, first-generation college students or those in the LGBTQ community.

4. Score well on the ACT or SAT

As a student, your ability to score well on college admissions exams could translate to academic scholarships that will save you a bundle on your college bill.

College admissions exams test high school students, typically juniors and seniors, on their knowledge in subjects such as English, Reading, Math and Science. Common such tests include the ACT and the SAT.

In recent years, many colleges have adjusted their policies to make such testing optional for applicants. However, the bottom line is if you’re a good test taker, you’ll want to submit your ACT or SAT score with your college application, since a high score could result in the college awarding you an academic scholarship.

5. Apply for grants

College grants are need-based gifts that don’t need to be repaid. Such awards are often funded by the U.S. Department of Education, state governments, colleges and organizations. As an applicant, you’ll need to provide documentation of your financial situation.

Examples of grants include Pell Grants (which may award up to $7,395 annually), Federal Supplemental Education Opportunity Grants (which can award $100-$4,000 a year) and state-based grants that are awarded to residents who attend in-state schools.

Private grants are also available and can be found on the Department of Labor’s website.

6. Start out at a community college

You can pay just a fraction of the cost of university tuition by attending a community college for your first two years. In addition to cheaper tuition, the benefits of community colleges often include smaller class sizes and an easier application process.

Before taking any community college courses, be sure to confirm with any potential university you may transfer to that it’ll award you credit for those particular courses.

7. Attend an in-state public university

Government-funded state universities usually charge you a lower tuition rate if you’re officially a resident of the state where they’re located. The average tuition for an in-state student at a four-year public university was $10,940 for the 2022-23 school year, according to a College Board report. For comparison, the average tuition for out-of-state students for the same year was $28,240 — or nearly three times higher — according to the same report.

Based on these numbers, you’d save around $69,200 in total by attending an in-state public university for four years instead of going to an out-of-state one.

When choosing among colleges, the net price — how much you’re responsible for after scholarships and grants — should be one of your biggest decision factors, says Robert Farrington, founder and CEO of The College Investor.

“If you spend too much money on college, it becomes not worth it,” Farrington says. “You won’t earn enough after graduation to offset the cost you paid for college. So while going to an expensive, private school far from home may sound appealing, if you’re paying a lot of money for it, it’s not worth it.”

8. Work through college

In addition to saving and preparing for college in advance, there are things you can do to offset costs after you’ve actually started college. One of these is having a job throughout your college years. The money you earn can be put to use for things like tuition, books, rent and living expenses.

Working through college can be a great way to avoid taking on student debt, says Hayes of Well Kept Wallet. “Let’s say that you are able to work just 20 hours per week, making $15 on average delivering pizzas. That would bring in an extra $1,200 per month. Annualized that would be $14,400. That would make a huge dent in your yearly tuition.”

When working, it can pay to choose a bank that also offers a high-yield savings account, so you can transfer some of your money there to earn a competitive annual percentage yield (APY).

“A high-yield savings account could be a good way to save your money now that interest rates are close to 5 percent,” Hayes says. “Let’s say you made $14,400 and put it in your savings account [each year]. That would turn into over $63,000 after only four years.”

Bottom line

Instead of resorting to loans, students can find ways to pay for their college education that include savings, scholarships, grants and employment. Other ways to decrease your bill include selecting a school that’s affordable, as well as by earning some college credits while still in high school.

Through some careful planning, saving and hard work, students can make it through college without loans – or at least nominal loan amounts – which allows them to begin their career with a greater degree of financial freedom and peace of mind.