How to Pay for College Without Student Loans
Paying for college is no small accomplishment. Funding your education requires some planning, forethought, and work, but it can be done.
You may be surprised to learn that many can pay for college without taking on burdensome student loans if they start early enough and look for money in the right places.
However, you end up paying for school, keep in mind that you’ll want to consider funding options in a particular order.
You’ll first want to look at the money you won’t have to repay, like scholarships and grants. You’ll simultaneously want to work to ensure you keep the net price of your schooling as low as possible.
How To Pay For College
If all else fails, you can consider student loans and/or income share agreements to fill in the gap, but you have numerous other options before you get to that point.
Apply For Scholarships
Scholarships are money you never have to pay back. There is typically some type of merit involved, as opposed to grants which are often based almost exclusively on financial need. You might get a scholarship for sports, academics or an extracurricular you participated in while you attended high school.
There are also extremely niche scholarships for almost any living experience you’ve had or aspect of yourself which is unique.
You can start applying for scholarships as early as middle school. The closer you get to high school graduation, the more plentiful the opportunities become. But scholarships aren’t just for high school students. There’s no shortage of scholarships out there without age requirements, and still, more which are geared specifically towards adult learners.
With changing demographics in college attendance, this is good news for both nontraditional learners and the schools which will accept their scholarship money to cover tuition.
Take College Courses in High School
Getting ahead while you’re in high school can quite literally pay off. Many state school systems — which can include community colleges — offer college credit to high school students who enroll in special programs.
These are classes you can take while a high school student which will be counted towards your degree. They may happen on the high school campus, on a college campus or a hybrid of both.
These courses may be provided to you for free depending on your state, but usually, even when you have to pay for the courses you’ll be paying a severely reduced premium.
Take AP Courses
Taking an Advanced Placement course in high school? A huge advantage to these classes is that if you take the test at the end, your school is likely to waive requirements for some 100- or even 200-level courses.
Taking the AP test costs money, but it’s generally less expensive than your typical, three-credit course.
Take CLEP Tests
CLEP tests can be taken by anyone, though they are particularly familiar to military members, who can take them free of charge. CLEP stands for College Level Examination Program. The idea is that if you can pass, you’ll “test out” of whatever course requirement you’re looking at.
For this reason, CLEP tests are commonly used to fulfill general education requirements, but they’re available for a wide range of subjects.
Fill Out The FAFSA To Pay For College With Grants
On the first of October before your fall semester starts, you’ll want to fill out the Free Application for Federal Student Aid (FAFSA). Filling out the FAFSA is free, and it has become easier in recent years. In the past, you had to manually transpose your or your guardians’ tax information into the portal.
Since this information is now digitized for most taxpayers, the process has become considerably less stressful.
Verify that your information is correct, submit then sit back and wait for your award letter. Depending on how much the FAFSA determines your family should reasonably be able to contribute towards your education, it will provide you with offers for federal grants.
These grants can provide you with thousands of dollars every year depending on your family’s financial situation. Grants are money you never have to pay back, making them one of the most valuable types of financial aid.
Check Your State Aid Options For College Funding
Typically, when you complete the FAFSA you will be automatically redirected to your state’s website for its department of higher education. If that doesn’t happen, visit its site yourself. Here, you’ll be able to apply for need-based state grants and scholarships that are usually a hybrid of needs- and merit-based when they are offered.
If you are disabled, you will also want to check with your state’s department of vocational rehabilitation. This agency can sometimes issue college funding to students with disabilities if that funding is available. The amount you can qualify for will vary from state to state, and vary based on your state’s budget in any given year.
Choose A School With A Low Net Price
One of the most effective ways to pay for school is to bring down the cost so it’s more affordable. In an era of ballooning higher education costs, this may appear to be easier said than done.
It is possible, though. For example, the max Pell Grant is currently $6,195. The average tuition at community college is $3,660. Because Pell Grants are refundable, that means that not only would your tuition be completely covered, but you would also get a refund check from your school each semester for just under $1,278 for the Pell Grant alone.
However, it’s important to remember that while you’re shopping for schools that the school with the highest sticker price might not actually be the most expensive at the end of the day. Ivy League schools offer notoriously large aid packages to students who are accepted. In fact, an ivy league school could end up costing less than the private school you’ve been eyeing.
In the end, the final net price of a school is going to depend on your aid package. Do not limit yourself out of fear of sticker price when applying, and be sure to wait to compare all of your options until you have a financial aid award letter delineating institutional aid from the college.
Get A Job To Pay For College
Of course, to pay for school you could get an old-fashioned J-O-B. As long as it’s not detracting from your studies, a job can provide you with the income you need to get by. The money you’ll need for food, entertainment and potentially things like auto insurance could be earned through hours of labor.
Employment can offer some extra perks to college students, too. Your employer may offer tuition reimbursement, where you pay for school upfront, but then submit the receipts to your employer so they can pay your back for the expense.
You may also be offered a select job on or off-campus through federal work-study. Work-study opportunities will be listed on your FAFSA award letter when available.
Ask Family for Help
If you’ve exhausted all the above options, it’s okay to ask your family for help if they can provide it. You’ve done everything you can to get your hands on college money, but you still have a balance left on your tuition bill. Your family may have started saving for your education when you were young through a 529 account or EE bonds.
Even if they pay in cash, accepting a gift from a family member is not anything to be ashamed of.
Even if your family can’t provide you with money directly, you may need their help as a cosigner to access loans.
Turn to Community Organizations
You may have exhausted scholarship opportunities in your local community, but that doesn’t mean you’ve exhausted borrowing opportunities. There are some nonprofits that will offer zero-percent-interest student loans to members of the community.
One example of such a community organization with branches across the country is the International Association of Jewish Free Loans.
These loans come with 0% interest, making them more advantageous than your typical student loan. While some branches will only lend to those of the Jewish faith, many branches — such as the ones in Los Angeles and Pittsburgh — lend on a nonsectarian basis to all local community members.
You will have to start paying your loan back while you’re in school, and if you don’t have an adequate credit history and/or income, you will have to enlist the help of a cosigner.
Once you have used every other source of funding available to you, it may be time to start looking at student loans. Student loans do have to be repaid, and they must be repaid with interest. Before you take out a student loan, do some research to make sure you’re happy with the projected return on investment for your degree.
There are two types of student loans: Federal and private.
Federal Student Loans
Federal student loans do not require principal payments until you’re six months post-graduation. Depending on the type of loan, the federal government may or may not pick up the interest payments while you’re a student.
Once you’ve graduated, you have access to advantaged repayment programs. These repayment programs allow you to repay based on your income, provide opportunities for loan cancellation in some instances, and loan forgiveness in others.
If you’re going to take out student loans, Federal options are typically preferable.
Private Student Loans
In general, you’re far more likely to have to start repayment on your student loans while you’re in school if those student loans are private. These loans may come with a fixed or variable rate, and there typically is no advantaged repayment plan.
You don’t have the same opportunities for cancellation and/or forgiveness as you do with federal loans, either. Private loans often rely on your credit history and score, so if your credit file is thin or nonexistent, you’re likely going to need a cosigner.
Income Share Agreements
Income share agreements (ISAs) are relatively new on the four-year college financing scene. Only a handful of schools offer them, and they are a bit controversial. With an ISA, you receive a set amount of funding for your education. Then, upon graduation, you will repay with a set percentage of your income over the course of a set number of years.
For example, maybe you borrowed $15,000 for your education. You agreed to repay with 4.5% of your income for the first five years following graduation. You land a job paying $60K/year, and end up repaying $2,700/year for a total of $13,500. In this situation, the ISA worked out in your favor.
If that first job paid $90K/year, though, you would have repaid $20,250. This means that in some situations, those who make a higher income will repay more than they would have if they had just taken out student loans. Some schools won’t even issue you an ISA until you have taken out the max amount of federal student loans offered to you, making considerations even more complex.
ISAs are particularly good for one group of college students, though: DACA recipients. DACA recipients can’t access federal student aid despite having federal work authorization. But they can often accept ISAs. That’s why schools like Colorado Mountain College offer ISAs to DACA students and other eligible noncitizens.
Paying For College Is Difficult, But Not Impossible
If you start early and look for money in the right places, paying for college is an achievable goal. You may be able to cut costs and get enough grants and scholarships to cover your education. You may do all that and still have to rely on loans or ISAs.
As long as you’re looking for the lowest-cost funding option first and have determined your degree will have an acceptable return on investment, you’re on the right track.