College student loan debt has risen from roughly $800 billion to $1.7 trillion since 2010, exceeding all other kinds of consumer debt in the United States. Students take out larger debts to meet larger tuition expenditures, putting college graduates and dropouts at a financial disadvantage.
Graduates’ low unemployment rates and high lifetime incomes constitute compelling reasons for higher education, but prospective students should not rely only on loans to pay for their education. Student loans can help with tuition and living expenses, making education a possibility for millions of people — but the average student loan adds thousands of dollars to the bottom line in the long run.
Today, nearly 70% of students graduate from college with debt. While student loans have become commonplace, optimizing the return on investment from education involves reducing borrowing to a minimum.
Many people believe that a combination of strategies is the best way to pay for education. You may get free college money through grants and scholarships, get cheaper credits and credentials online, work a part-time job on campus, or even finish a semester or more early. It is ultimately up to you to determine which approaches work best for you.
9 Ways to Reduce the Cost of College
Attend a Public University in Your Home State
Choosing to attend college in your home state is a terrific way to save money. Colleges presume you and your family pay taxes in your home state; those revenues fund education, so in-state students benefit. Out-of-state students can pay two or three times as much in tuition as in-state students, depending on state agreements (common among public institutions in surrounding states).
According to College Board data for 2020-21, the average tuition cost for in-state college students is $10,560. The average out-of-state expense this year is $27,020. The cost of attending college out of state practically triples.
Another financial advantage of staying in your home state is that you will not have to pay for accommodation. Students who can live at home with their parents while attending college will save at least $10,000 a year. According to the College Board, room and board costs more than $11,000 a year for both in-state and out-of-state students. Meanwhile, private college students spend more than $13,000 each year.
As part of a scholarship package, schools may waive some or all of the out-of-state markup, although such a write-off is far from certain. If you’re set on attending an out-of-state school, apply for grants and scholarships as soon as possible, and keep in touch with the admissions office if tuition remains out of reach.
While community colleges are a less expensive option, they are not very successful in transferring students to universities. Eighty percent of community college students aim to earn a bachelor’s degree, yet just 25 percent of them successfully transfer to a four-year institution within five years of starting out.
Make a transfer plan with your academic advisor if you want to save money by attending community college. They may assist you in navigating course options so that your credits transfer to your desired institution.
Stay away from for-profit colleges.
For-profit colleges have been chastised by educators and lawmakers who claim they prey on underprivileged students, leaving them with debt rather than realistic employment alternatives. Currently, the loan default rate for students attending for-profit institutions is double that of those attending public two-year colleges.
There’s also the option of acquiring residence in the state where you want to go to college. Residency restrictions vary by state and school, but the general norm is that students must be financially self-sufficient and able to demonstrate that they have resided in the state for at least one year.
Begin your education at a community college.
Starting in a community college is one of the most cost-effective routes to a bachelor’s degree. Annual tuition at community colleges is a fraction of what it is at four-year universities – even at public colleges that charge in-state tuition. Community college students pay an average of $3,770 for the 2020-21 academic year. (Add another zero for the average private college cost.)
For-profit colleges make lofty promises to students through misleading marketing tactics, only to fail to graduate them or connect them with promised career possibilities. The Trump administration repealed Obama-era restrictions requiring for-profit universities to demonstrate that they were training students for gainful employment, but President-elect Joe Biden has promised to reinstate these laws.
For-profit colleges not only cost more, but they also provide the least benefit to graduates. While any education will enhance anticipated wages, analysts estimate that graduates of for-profit college associate degree programs would have the poorest earnings gains of all.
Apply for Financial Aid As Soon As Possible
Despite the fact that college tuition is expensive, most students do not pay the entire sticker price. According to the Department of Education, over 40% of students from households earning less than $125,000 per year get financial help sufficient to cover full tuition at public colleges.
Federal student assistance makes college cheap, but cumbersome paperwork and ambiguous deadlines disadvantage poor students. Low-income families, who are the most in need of college financial aid, are the least likely to complete the Free Application for Federal Student Aid (FAFSA). Many people said they feared they wouldn’t be able to qualify.
Students from low-income households who apply early are more likely to receive the greatest FAFSA help. There are state-based merit assistance programs, as well as hundreds of grants and scholarships, in addition to need-based programs such as Pell Grants. The FAFSA links students to over $150 billion in free college money.
While completing the FAFSA can be difficult, especially for first-generation students, it is becoming less difficult. The Department of Education simplified the FAFSA in 2019, removing up to 22 questions. In the next years, the FAFSA will be shorter and made more user-friendly.
The FAFSA is accessible every year beginning October 1 (for help for the next school year). There’s no reason to put off filling out the application until January, so get started as soon as possible.
Prior to enrolling, get college credit.
The expense and duration of bachelor’s programs reduce the value of the degree and create significant hurdles for low-income students. However, new collaborations between internet behemoths, online institutions, and flagship universities promise to reinvent the collegiate experience.
Massive open online courses (MOOCs) provide an early insight into higher education’s future. Anyone with an internet connection may take these online classes. Although many are free, most that offer college credit require payment since they must contain a proctored test. Coursera and edX, for example, aggregate MOOC sites that offer thousands of courses for both personal enrichment and college credit.
Another way to get inexpensive internet credit is to use what you already know. Prior learning assessments (PLAs) allow you to skip lessons go directly to the tests. You’ll get credit if you pass a proctored test demonstrating your knowledge of general education courses including English, arithmetic, and sociology.
While universities’ matriculation requirements are growing more liberal, MOOC and PLA credits do not transfer to all schools. Before enrolling, check with your home college to ensure that those lower-cost credits are compatible with its transfer policies and residence requirements.
Select a Certificate. Rather than a Degree
If you want to pursue a regular college degree, you should prioritize transferable credits. However, four-year degrees are neither required or viable for many professional fields. Certificate programs allow you to get the skills you need for your chosen vocation while spending less money and time on your postsecondary education.
Some of these certifications have completely replaced bachelor’s degree programs. Google, for example, intends to establish a certificate program that will be less expensive than a college degree. Google Career Certifications, which may be obtained in six months, are more akin to vocational certificates or apprenticeships, although they are considered to have the same earning potential and status as a bachelor’s degree.
According to Kent Walker, Google’s senior vice president of global affairs, the business “will henceforth recognize these new career certifications as the equivalent of a four-year degree for relevant professions.”
Though there will be internships and job possibilities at Google, the degree is designed to prepare graduates to work for any organization in any industry. A group of high-profile organizations has already agreed to use the program’s graduating list. Google forecasts that more firms will provide their own training programs, allowing them to hire for personality first and skills-based training second.
Look for Less Expensive Textbooks
Buying each term’s necessary textbooks, regardless of your degree, may significantly increase the expense of education. That per-term cost might be in the hundreds of dollars for many majors, particularly business ones.
Buying old textbooks is a simple way to save money. Because students are more likely to buy last year’s dog-eared edition for $70 rather than this year’s $140 edition, it’s a good idea to go to your school bookstore early, before the shelves empty. Many college cities also have off-campus bookstores, which regularly purchase back student books and resell them at a lower price the following year.
Then there’s the internet. Amazon has significantly increased its academic textbook presence, now selling a wide range of college textbooks in new, used, and leased condition. However, unlike school and local bookstores, Amazon inventory is not particular to any college, so double-check the edition before adding it to your basket.
If you need money but also want to devote adequate time to your education, an on-campus or work-study job is your best choice. On-campus supervisors regard their personnel as students first and foremost. They will work with you to guarantee your success if you need to work fewer hours around midterms or if your grades suffer.
There are also other flexible employment available to college students, many of which are available online, such as tutoring, uploading class notes, freelancing, and selling crafts. Traditional off-campus employment, such as serving in a restaurant or working the front desk at a gym, provide additional perks such as income-boosting tips or downtime for reading.
If working throughout the school year is too stressful, consider working during your summer vacation.
Early College Graduation
Every semester of college increases the overall expense of your degree. Extending your time in school, for example, by taking time off, taking classes outside of your degree requirements, or changing majors, can give significant, rewarding experiences and potentially enhance your career. However, taking those winding pathways adds to an already steep total.
Graduating early, even if just by a semester, can significantly lower the overall expense of education. However, rushing to graduate might backfire. You don’t want to jam your course load each term to the point that your scores suffer. Planning ahead of time is essential.
Take college classes in high school, test out of general ed areas in which you don’t require a 101 class, and rack up credits over the summer term. You’ll have to pay less if you spend less time in class.
But it’s not only about how much you save; it’s also about how much you make. The sooner you have your degree, the sooner you can start making money with it. Hitting the job market a year early might put you one step ahead of the competition for promotions and increases for the remainder of your career.