How I (Almost) Completely Avoided Taking Out Student Loans

How to avoid student loans is a question that bothers multiple generations.

If you’re a teen (or the parent of one), you might be hoping to get ahead of rising college costs to skip or limit your family’s borrowing. And if you’re a recent (or not-so-recent) college student, you might be wondering how to avoid student loan repayment, or at least be done with it as fast as possible.

Fortunately, no matter where you are in life, there are ways to avoid student loans. Future college students might look to supercharge their cash flow. And older borrowers could investigate ways to speed through repayment via loan forgiveness or refinancing programs.

Let’s review solutions for each of these predicaments:

How to avoid student loans — before attending college

Far and away the best way to avoid paying student loans is to avoid taking out a student loan in the first place. Here are nine ways to do just that, including some tips from personal finance writer Ben Luthi that we’ve put to use personally.

1. Start or amp up your saving now

While it helps to have plenty of time on the horizon before enrolling in college, it’s never too early or late to start saving for the costs.

If you’re not yet of college age, huddle with your family about where you stand with your college savings. Commit to either starting or contributing to a 529 college savings plan or alternative account.

If you’re already on campus, sock away what you can, even if it’s just in a high-yield savings account. Managing your cash flow, which we’ll discuss below, will help you in this aim.

2. Consider shortening your route to a degree

The less time you spend in school, the more money you’ll save. So it’s wise to make sure you aren’t taking classes longer than you need to.

One way to shorten your degree path is to enroll in AP classes or dual enrollment while you’re still in high school. This way, you can earn college credits so that you’ll step on campus having already made progress toward a diploma.

You might also consider skipping the traditional four-year college program altogether. Think about your future career and whether the industry requires a bachelor’s degree or something else. If you’re an aspiring web developer, for example, you might look into coding bootcamps that require anywhere from weeks to months of post-high school education.

3. Include inexpensive colleges on your college list

The main driver for student debt is the cost of tuition and fees, which continue to rise. In many cases, however, you can find a college nearby that charges below-average tuition and fees while also providing a lot of value.

You might consider…

• Attending a four-year public school nearby to score a discounted, in-state tuition rate.
• Enrolling at your local community college for its lower price (and you could always transfer to a four-year program later on.)
• Asking colleges and universities about whether they offer tuition waivers.

There are also…

• Work colleges that offer reduced or free tuition in exchange for students who are approved to work jobs on or off campus
• No-loans colleges that promise to avoid student loans in financial aid packages

You may need to do some extra research to find a suitable college with low tuition costs, but the money you save years beyond your graduation is worth it.

4. File your FAFSA and seek out grants

Filing the Free Application for Federal Student Aid (FAFSA) is just about the most important thing to do in this context. The FAFSA is the gateway to federal grants and work-study programs as well as loans.

Don’t forget that states also dole out grants for college. To be eligible for them, you might also have to submit your state’s version of the FAFSA. If you live in the Sunshine State, for example, you should complete the Florida Financial Aid Application (FFAA).

Read up on grants for:

• Graduate students
• Adults returning to college
• Paying off student loans

5. Apply for school, private scholarships too

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 many organizations and companies nationwide helping students cover the cost of their education. You can find these opportunities using scholarship search engines or by bugging your financial aid office.

Our expert’s experience: How to avoid student loans

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. Doing this qualified me for a full-tuition academic scholarship after the initial one ended. The money I received covered most of my tuition costs. – Ben Luthi

6. Negotiate your financial aid package

Once you apply to the schools on your finalized college list, you’ll start receiving Student Aid Reports that document your eligibility for federal, state and school-offered assistance. After that, you’ll begin receiving financial aid award letters.

These letters include your financial aid package, which could comprise grants and scholarships, work-study programs and loans. You can compare these offers side by side using our calculator (below). You might have a legitimate reason to negotiate your financial aid.

7. Increase your income, if possible

It’s not always easy to work during school. Depending on the program you’re in, your studies may take up a large chunk of your time. There’s the social aspect of college to consider as well. If you want to decrease your dependence on debt, though, getting a job goes a long way.

• If you’re already working, ask your employer if it offers tuition reimbursement.
• Perhaps accept that federal work-study job that was offered in your financial aid package.
• Consider an internship or part-time job, especially if it helps pay the bills without taking away from class time.

Our expert’s experience: How to avoid student loans

I worked at least 32 hours a week doing customer service while going to school full-time. The income I earned provided enough cash to cover my living expenses, the 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, the 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. – Ben Luthi

8. Trim your living expenses

Living like a student is a sometimes misunderstood phrase. It doesn’t necessarily mean paying for expensive on-campus housing and college meal plans.

If you’re really looking to avoid student loans, consider trimming your living costs by sharing low-cost, off-campus housing with roommates and splitting your food and cooking bills. (If you’re intent on living on campus, consider becoming an “RA” or resident advisor to lower your tuition bill.)

Another secondary but significant expense that can be cut: shiny new textbooks. Look into acquiring used books or renting them. And, of course, selling your textbooks when you’re done with them is a nice way to make a little extra money.

9. Stick to a budget

Regardless of how much income you earn or the source, living on a budget can help you manage your cash flow (particularly if you enroll in a tuition payment plan that spreads out the burden of your college costs). It can also help you avoid overspending on unnecessary things, which can help you avoid student loans.

Our expert’s experience: How to avoid student loans

I didn’t start budgeting until a year and a half after I started at BYU. At the time, I used a simple spreadsheet and tracked my expenses manually. Later, I souped up my spreadsheet to automatically update the budget when I added a new transaction. I planned out my expenses for each month and left money for savings as well in case my job situation changed. – Ben Luthi

Depending on your preferred budgeting method, you can do a monthly budget as well as one for each semester.

If you can’t fully avoid student loans…

If after adopting our nine strategies, you’ve still found borrowing to be necessary, make sure you do it wisely. First, rely on federal loans that you might have been offered in schools’ financial aid packages. Federal loans feature the best repayment protections.

And private student loans can help you bridge any remaining gap in your cost of attendance. Just be sure to compare at least a few lenders, pitting them against each other on APRs, discounts and fees as well as repayment terms and safeguards. Then you’ll find the best overall loan for your situation.

How to avoid student loans — after you’ve borrowed

If you’ve already taken out education debt and are pondering how to get rid of it, there is a whole different set of potential solutions for you.

Our guide to jump-starting your student loan repayment is a good place to start. You can learn about choosing the right repayment strategy, scoring a discount for enrolling in automatic payments and improving your cash flow to aggressively prepay your debt.

Those measures will help, but they won’t teach you how to avoid student loan dues in the near term. For more drastic measures, you might consider:

• Student loan forgiveness programs: There are myriad loan forgiveness, cancellation and discharge programs for federal loan-holders. Check your eligibility for partial or full relief of your remaining balance.
• Student loan repayment assistance programs (LRAPs): Your location or career might make you eligible for state and employer-based repayment assistance programs. You could have a chunk of your balance repaid in exchange for working in a certain area.
• Student loan refinancing: By refinancing with a private lender, you could secure a lower interest rate and a shorter repayment term to avoid student loans lasting forever. Just be sure refinancing your federal loans is the right choice since you’ll lose access to government-exclusive initiatives, such as those loan forgiveness programs.

Of course, keeping your college budget intact and living like a student even after leaving school can also help you avoid student loans by paying them down as fast as possible.