How I maximized my learning potential without taking on too much student debt

When I first applied to school, I remember feeling overwhelmed when it came to the sticker price. The feeling of shock after receiving my financial aid award letter is what launched me into the journey of saving as much money as I could in school. Through coincidental wins I experienced and mistakes I made along the way, I learned a lot about finances — especially student debt.

For nearly a decade, American students have said that student loan debt has stunted their financial growth. With total student loan debt exceeding $1.75 trillion in the first quarter of 2024, more students have been questioning the value of taking out debt for a degree. According to Bankrate’s Student Loans and the Presidential Election Survey, 29 percent of American adults call student loan debt a national crisis and nearly 1 in 5 adults (18 percent) say student loan debt will have a major influence over their 2024 presidential vote.

If the cost of a post-secondary degree or certification has kept you from pursuing an education, there are ways you can reduce the cost. The tides are changing when it comes to earning a degree and as technology develops, so do the opportunities at your disposal.

How to avoid taking on too much debt for college

College is an expensive investment — there’s no denying that tuition and fees are a large chunk of change for most students. As of March 2023, 21 percent of borrowers owed between $10,000 and $20,000 in federal debt alone. Despite this, borrowing money is a necessary step that most Americans need to take when it comes to earning their degree.

This I know from personal experience — like most inbound college students, I knew I was going to have to borrow money to afford my degree. While I didn’t have a specific borrowing limit in mind, I did make strategic decisions with where I earned my degree and how I went about the process.

There isn’t a number that makes a specific amount of student debt “too much”, but there are precautions you can take to protect your financial future. First, you need to consider whether a degree is necessary for your career — especially if a career certification or apprenticeship could suffice.

Next, consider the return on your investment (ROI) of your degree. If your debt will significantly cut into your anticipated wages until retirement, think about whether this monetary commitment is worth it for you. If not, look into less expensive online programs or certifications that yield a higher return.

With college costs on the rise, the sentiment behind a degree isn’t only changing for students. Industry giants like Tesla, Google and Apple no longer subscribe to the idea that applicants must have a four-year degree to be well-equipped for a job.

However, not every company has jumped aboard the no-degree train. Overwhelming evidence still points to the fact that bachelor degree holders are at a financial advantage over those who stopped formal education at a high school diploma or GED.

That said, financing a college degree is still a necessity for many, just like it was for me. If you’re like most students and need to take out loans, there are ways to minimize — or, in unique cases, eliminate — the total cost of your higher education.

1. Federal financial aid

Applying for federal need-based aid should be the first step you take, even before you think about applying for outside scholarships. Even though your total award amount is based on financial need, all domestic students, even DACA recipients, are eligible to apply through the Free Application for Federal Student Aid (FAFSA).

Types of need-based federal student aid

• Grants: State and federal grants are available to students who fill out the FAFSA and are awarded based on financial need. Grants don’t need to be repaid and are often first-come, first-serve, so it’s best to apply as soon as the application opens. State grants may have earlier deadlines, so research your state deadlines before filling out the FAFSA.
• Subsidized direct loans: Although they still must be repaid, Direct Subsidized Loans are awarded based on need and student information. With a subsidized loan, borrowers don’t have to pay interest on the loan while enrolled in school.
• Federal work-study: Federal work-study programs allow students to work a part-time job while enrolled in school. The jobs are typically related to the major or field of study and are monitored by the Education Department. Students can use the earnings to help alleviate the burden of their tuition and related expenses.

I was fortunate enough to qualify for a few subsidized loans and I can’t encourage students to apply for need-based aid enough. They allowed me to focus on my studies without having to worry about making payments and saved me thousands of dollars in interest accrual.

2. Maximize scholarship and grant opportunities

Scholarships and grants are the most reliable way to reduce your student debt load. Offered by national and local organizations, colleges and companies, there truly is a scholarship available for every student.

After applying for federal aid, the next best step is to apply for scholarships and grants. Like need-based aid, scholarships and grants don’t need to be paid back. If you fail to maximize all of your award opportunities, you’re basically leaving free money on the table.

Private scholarships and grants

Contrary to popular belief, the best scholarships and grants aren’t limited to need-based financial aid or merit-based awards. If you’re anything like I was when preparing financially for school, I gave up on applying before I even touched an application.

My grades were slightly above average and aside from a few extracurriculars, I hadn’t participated in a large amount of community service — I assumed I was unqualified. Looking back now, I regret this decision entirely. Unbeknownst to me, I was leaving thousands of dollars in potential money on the table.

Jim Lewis, President and co-founder of the National Society of High School Scholars (NSHSS), encourages students to apply for scholarships and grants, especially if they’re questioning whether the time commitment is worth it. “Many people may not realize it, but scholarships can cut a significant cost of tuition. Research and applying is a great investment in time,” he says. “We also know NSHSS members who have paid for their entire college tuition through various scholarships and grants,” Lewis adds.

For the students out there who didn’t graduate top of their class, there are scholarships that are not merit based for just about every student. “Family income, ethnicity, and academic merit don’t have to be prerequisites for a scholarship. Countless are available for athletics, minorities, STEM & STEAM, community service, music and those from government and large corporations,” Lewis says.

4. Community college

Community colleges are affordable, two year public schools that generally don’t host on-campus housing. Most community colleges offer associate degrees, career certifications and may even host career training and trade programs.

Many students choose to attend a community college to alleviate the financial burden that comes with the first two years of school. Unless you take advanced placement classes during high school or a similar educational program with transferable credits, the first two years of a college education are typically filled with general education courses.

Due to the increased workforce demand and cost of a college education, there has been an uptick in community colleges offering bachelor’s degrees. As of now, there are 24 states that have at least one community college offering a four-year program. There are three types of degree programs hosted across the schools:

1. Bachelor of Science (BS).
2. Bachelor of Applied Sciences (BAS).
3. Bachelor of Technology (BT).

If you’re already planning to earn one of the following degrees, research the community colleges in your area to see if any are offering a bachelor’s program. This could easily save you thousands of dollars in tuition, fees and housing costs.

Source: Collegeboard

Attending a community college and living with family members or a friend is a sure-fire way to save money when pursuing a higher education. Just make sure the credits are transferable and valid at your intended university. Otherwise, you could be out thousands of dollars in tuition costs and will likely need to retake the same courses again at your university.

5. Attend a local school and commute

If I could give one piece of advice to any incoming college student, it would be to attend the closest in-state school and commute. If possible, live with family members to alleviate the cost of housing and, if you’re really lucky, potentially household expenses altogether.

To be frank, the cost of my schooling was the last thing on my mind when I first started college. I was far more concerned about the color scheme of my dorm and acclimating to the campus. However, I distinctly remember coming home for holiday break and my dad sitting me down to talk about how much I’d be on the hook for in loans if I continued to live on campus.

While this was one of the more stressful moments of my life, I couldn’t be more grateful for that conversation. I had plans to eventually earn a Ph.D, so my next goal was to make my schooling as inexpensive as possible. I’d love to say that attending a public in-state university about 45 minutes away from my parent’s house was an intentional choice, but it was just a coincidence.

I weighed my options carefully, and after serving one semester as an RA (resident advisor) in my sophomore year, I decided to commute and live at home. By doing this, I saved around $40,000. Did I miss out on two years of the stereotypical college experiences? Yes. But being able to enjoy post-graduate life without worrying about paying down six-figures of debt made it worth it.

6. Opportunities outside of a four-year degree program

Trade programs and apprenticeships offer certifications for careers that require on-the-job training. Electrical work, plumbing and carpentry are some better-known examples of trade jobs.

Getting a pilot’s license through a local flight school, taking an IT course, earning a cosmetology degree or going to culinary school are also examples of a trade education. Even though the price point will vary based on the job and the school, it’s very rare that an apprenticeship or certification program certification or license will cost more than gaining the same skills at a four-year degree.

You could also consider a trade job as a lower cost stepping stone to your ultimate career goals. For example, if you’ve been thinking of becoming a licensed nurse practitioner but are unsure of the monetary or time commitment, check out a local community college or hospital to see if they offer a Practical Nurse licensure.

7. Online bootcamps

Bootcamps, especially computer software and coding, and online IT courses are becoming increasingly popular. They allow students to earn a professional certification for a fraction of the cost and time commitment that a degree requires. Of course, a bootcamp or online IT certificate won’t replace a degree when one is necessary, but it certainly can help you get your foot in the door.

Before making a final decision about your next steps, look into scholarships or fellowships that are designed for upskilling. This could include working with different systems or getting career-specific certifications, often for a reduced price.

If you do need to finance the certificate, you will likely need a much smaller student loan than you would for a four-year degree. When shopping around, make sure the lender you’re considering offers financing for bootcamps and compare student loan rates ahead of applying.

8. Work an on-campus job while enrolled

Working an on-campus job is different from federal need-based work-study. While work-study is monitored by the Education Department, working on campus is just like working any other job. Look at different organizations that your school hosts, like housing and residence life, for jobs that offer cost benefits as well.

I decided to become a resident advisor my sophomore year of college. I certainly wanted the perks that came with the job — free housing, meal stipends and a monthly paycheck, but I also wanted to become an RA to meet new people. Because I was an RA, I saved thousands of dollars on housing costs while also cashing in a monthly paycheck.

Getting a job with perks other than a paycheck are often large responsibilities and are difficult to land. Between helping residents, planning programming and being ‘on duty,’ there wasn’t time for much else other than my studies. If your major is a large time commitment or you prefer more freedom with your schedule, I would recommend going with a more flexible part-time position on campus.

9. Department jobs and fellowships

Most schools offer department-specific fellowships or paid positions as well. This can include tasks like clerical work for the department or working as an assistant to a professor. Upperclassmen can take advantage of graduate assistantship jobs. These programs allow students to act as a professorial assistant or participate in advanced research projects in exchange for reduced tuition.

Most of these programs are available by application and are highly selective. If you plan on getting your master’s or Ph.D at the same school, contact the department head well in advance. If you’re an underclassman, inquire about part-time positions within your major to get a foot in the door with department heads and staff members.

Why student loan debt is on the rise

Over the past 30 years, college prices have skyrocketed. In an April press brief, the Biden administration addressed the financial struggle many Americans are currently facing. “Over the last 20 years especially, the sticker price of college has risen significantly,” the statement reads. But what’s the root cause of college increasing so significantly? The answer is nuanced, but not uncommon.

“While there are many reasons for this trend, the most rapid increases in tuition often occur during economic downturns as tuitions grow to fill the budgetary holes that are left when states cut their support to public college,” the release reads.

During an economic downturn, college enrollment tends to increase. However, this also means increased debt loads. In recent years, contracting state appropriations have shifted funding away from need-based aid opportunities, the release explains. In turn, many students have an increased need for private aid and loans.

Why applying for federal financial aid matters

If getting loans for college is a must, it’s crucial that you apply for federal financial aid first. Unlike private student loans, federal student aid isn’t based on your credit score and is open to all domestic borrowers. Federal aid also comes with alternative repayment plans and forgiveness opportunities through the Education Department. Most private lenders don’t have these offerings.

Federal student loans also always come with fixed interest rates. Even though interest rates are high right now across the board, federal rates could still be lower, especially if your credit isn’t in good shape.

However, federal student aid has a downside. There are strict borrowing caps that, depending on your degree, often don’t cover the cost of attendance. Only when federal aid and outside scholarship opportunities are maxed out will you want to turn to a private loan.

Down the road you may need to consolidate your loans. Federal loans can be consolidated with a Direct Consolidation Loan, which comes with a fixed interest rate. For private student loans you will want to research the best student loan refinance rates.

How to reduce additional college costs

Outside of how you pay for school, you can reduce the cost of your college education by making adjustments to your lifestyle. While it may seem like these small shifts won’t make a difference, remember that when practiced daily, multiple adjustments can dramatically decrease your cost of attendance.

• Start applying for scholarships one to two years before the semester begins.
• Live off-campus with multiple roommates to decrease housing costs.
• Shop at discount and warehouse grocery stores.
• Meal prep on the weekend for the week.
• Bring your own meals to campus if you live off campus.
• Cut coupons and only shop deals when possible.
• Practice mindful shopping habits.
• Limit eating out to a few times a month.
• Use a budgeting app to track every penny that comes in and out of your account.
• Eliminate unused subscriptions.
• Sell your old clothes at a secondhand shop either in person or online.