These days it seems that no college education is complete without a mountain of student loan debt.  College costs are rising faster than inflation and in a recession families have fewer resources to put towards the back breaking price of tuition, room, board, fees, and books.  Student loans are pitched as necessary, normal and a great investment. But only one of those things are true – student loans are unfortunately a normal part of our college and university landscape especially if you’re funding a college transfer.

But here are three reasons you, your family or your student shouldn’t be “normal”:

  1. Once you take them out you’re stuck with them.  Unlike most debts you can take out like a mortgage, car loan, or credit cards student loans are extremely difficult to get rid of during bankruptcy proceedings.  There’s also nothing associated with your student loan to foreclose on or repo. This often goes for cosigners too.
  2. They’re hardly “cheap money”.  With origination fees of 1%, 4% or more of your disbursements and interest rates at 6% or above, most student loans hardly qualify as inexpensive in the current economy.  Their interest rates (and interest typically accumulates as soon as the money is distributed) are higher than those for mortgages right now.
  3. They can encourage you to lose track of costs.  When the money going out for another semester’s bill doesn’t come directly from your pocket it can become easy to end up with a higher than intended student loan balance.  Experts recommend not taking out more loans than you can reasonably expect to pay for with your first year’s salary. But with tuition hitting $50,000 or more per year at some private colleges and graduates expecting less than that in salary it can be easy to blow recommendations out of the water.

So great, we’d all like to avoid student loans, but college is expensive, how can we do it?

 Here are five ways to reduce your usage of (or maybe even avoid entirely!) student loans for college:

  1. Pick a cheap school.  Not the most fun suggestion, I know, but your selection of college or university is the single biggest factor in the cost of your education and it is under your control.  Think about state schools, scholarship offers, financial aid packages and more. (Barb’s comment; I attended 3 state schools and received an excellent education at each one)
  2. Negotiate.  Did you know that you could do this?  My SO got a full tuition scholarship from one college and got another to match it.  The second college hadn’t offered any aid or scholarships to start with.  If you’re a high performing student or have significant financial need you can ask, very politely, if the school of your dreams can match a better offer you have on the table.
  3. Appy, apply, apply.  Not to schools, that gets expensive and excessive, but for scholarships, internships, financial aid and other opportunities like being a resident assistant (RA) to help defray your
    costs.  Getting scholarships can be even harder than getting into your top college so keep practicing.
  4. Get cheap textbooks.  Plan your course schedule ahead of time if possible so when students want to unload their books at the end of the semester you can snatch up books for your next semester’s
    classes.  You can also look online for used books and there are several useful aggregators that will comparison shop for you. These saved me hundreds of dollars with just one search. (Barb’s comment; Amazon.com has great affordable textbook options)
  5. K.I.S.S. – Keep it short smartie!  An extra year in school means 25% more in costs and even more in student loans.  Many scholarships will only cover your first four years.  So go in and get out!  Stay focused so college isn’t extended by failed courses, irrelevant minors, or leaves of absence.   Even better, if you can get AP credits to transfer in, take courses online or during breaks you might be able to graduate in three years for much less than the full four years.

In theory, there is no reason a student or their family has to take out student loans to pay for a college education and there are many reasons why they should try to avoid it. There is no substitute for planning ahead and saving, but there are many strategies you can take advantage of to keep the total tab low and prevent student loans from becoming an enormous burden.

Guest author; No Debt MBA writes about personal finance and education.  No Debt MBA has been accepted to a top 5 business school and is trying to graduate without taking out any student loans.

What are your suggestions for saving money while receiving a higher education?

image credit; Bill McCallen

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