20 Tips on How to Avoid Student Loans

Last Updated on February 15, 2023

With the cost of college continuing to rise, the average student loan debt is also increasing. The current student loan burden in the United States now sits at $1.7 trillion – an increase of 102% over the last decade. 

But for students whose parents can’t afford college or who don’t have full-ride scholarships, student loans are still the best way to fund a college education. Still, most borrowers aren’t prepared for the stress that the repayment process will bring after their grace period ends. Many also don’t understand how student loan interest rates will impact their repayment timeline and the total cost of repayment.

If you want to avoid the negative consequences of student loan debt, the best strategies involve being proactive. Here are 20 ways to avoid or reduce student loan debt before, during, and after college.

How to Avoid Student Loan Debt

There are many things you can do before starting college that will help you avoid student loan debt. Here are the top strategies: 

• Save Money
• Choose Your School Carefully
• Get Good Grades in School
• Go To Community College First & Transfer Your Credits Later
• Consider Going to School Abroad
• Apply for Scholarships & Grants  
• Submit Your FAFSA As Early As Possible
• Take IB or AP Classes in High School
• Explore Hybrid Learning or Online Classes
• Consider Joining ROTC
• Pick Your Major & Map Out a Path to Graduation 
• Get on a Tuition Payment Plan

1. Save Money

If you still have time before college, you may want to start a college fund. There are many different ways you can save up for college:

• 529 plan
• Coverdell Education Savings Account
• Savings account
• Roth IRA 

If you have a 529, you can only spend the money on 529 plan qualified expenses. This includes tuition, room, and board, fees, and supplies. If you use the money on unqualified expenses, you’ll have to pay a 10% penalty and income tax on the amount.  

2. Choose Your School Carefully   

Not every college is created equal. Some schools have bigger endowments and can offer more financial aid, while others have more limited aid opportunities. Some schools go the extra mile and don’t charge any tuition.

There are some no loan colleges that work hard to help their students avoid taking out student loans and provide other financial aid solutions. Unfortunately, admission to these schools can be difficult.

You can also minimize student loan debt by comparing private and public college costs. For the 2021-22 school year, the average cost at a private university was $55,800, while the average annual cost at a public university was $27,330.

Attending an in-state public university is the least expensive option for most students because the annual tuition cost is the lowest. You may also qualify for state grants and scholarships, further reducing your total bill.  

3. Get Good Grades in School 

The grades you receive in high school have a huge impact on the number of scholarships you will receive, as well as the monetary amount awarded. Students with good grades will receive more scholarships, which will reduce the number of student loans they need.

There is no exact minimum GPA needed to qualify for a scholarship, but 3.0 is a good baseline. Each scholarship will be different, so read through the requirements before you apply. 

4. Go To Community College First & Transfer Your Credits Later

Attending community college can be an inexpensive way to get your basic classes before transferring to a four-year school.

Ensure the community college you attend has an articulation agreement with the four-year school you’re interested in. That means your credits will automatically be accepted. If your credits aren’t accepted, you’ll have to retake those classes – and pay for them again. 

5. Consider Going to School Abroad 

If you want to save money, consider attending college in a different country. Some countries, like Germany, Iceland, and Norway, do not charge tuition. You may still be responsible for room and board, which will vary depending on where you live. 

6. Apply for Scholarships & Grants  

Applying for scholarships and grants can reduce your dependence on student loans. There are many ways to get a scholarship, including applying directly through the college and external websites like Fastweb, GoingMerry, and Bold.org. 

Keep applying for scholarships throughout your college career, even when you’re a senior. There are many awards available for upper-level students.  

Here are some more resources for scholarships:

• Scholarships for Latinx Students
• Scholarships for Black & African American Students
• Scholarships for Women
• Scholarships for Adults Going Back to School
• Scholarships for Adopted & Foster care Students

7. Submit Your FAFSA as Early as Possible

One of the easiest ways to reduce your student loan needs is by submitting the FAFSA early. The sooner you complete the FAFSA, the more likely you’ll qualify for limited types of financial aid, including work-study, grants, and scholarships.

The FAFSA is available by October 1 of the year before you enroll. Be mindful of those dates and try to gather the necessary documents before the FAFSA comes out.

8. Take IB or AP Classes in High School 

To graduate from college, you need to fulfill a certain number of credit hours. If you can start college with a certain number of credit hours already, then you won’t have to take – or pay for – as many additional credit hours.

Taking AP or IB level classes in high school and scoring well on the AP or IB tests can help you receive college credit before you even step foot on campus. Doing well on the SATs or ACTs can also help you test out of certain courses, but this depends on the specific policy of your school.

9. Explore Hybrid Learning or Online Classes 

If you live close enough to commute to college, then you may want to consider living at home and saving on room and board. You can also try to take online classes where you won’t even be required to leave the house.  There’s often little difference between online vs. in-person classes unless you’re in a major that requires labs or other in-person activities. 

10. Consider Joining ROTC

The Reserve Officers’ Training Corps (ROTC) is a program where students promise to join the military in exchange for tuition assistance. The amount you’ll receive depends on your college, your commitment, and other factors.

Most students have to serve for three or four years after graduation, so don’t join the ROTC unless you’re comfortable with being in the military for that long.

11. Pick Your Major & Map Out a Path to Graduation 

Before you attend college, think about the kind of career you want and what degree you’ll need. Some jobs require a master’s or doctorate degree, which you should also factor in when calculating college costs.

Mapping out your career plans can help you figure out what you want to major in, so you don’t flip flop between majors once you’re enrolled. If you’re not sure what major to choose, talk to a guidance or career counselor who can offer suggestions. 

12. Get on a Tuition Payment Plan   

Many colleges offer payment plans where you can pay a portion of the tuition in installments over the course of the semester. There will usually be three or four payments that are each due about a month apart.

You can choose to pay part of your tuition this way and rely on loans for the other part. There may be a small fee for setting up a payment plan.

Avoiding Student Loan Debt While in College 

If you do have to take out student loans, there are ways to minimize how much you have to borrow. Read below for more ideas. 

13. Test Out of Courses  

Many colleges ask that you take placement tests for English, math, and language courses. The better you do on these exams, the fewer introductory classes you’ll need to take.

Before taking these exams, refresh your skills. Consider hiring a tutor if you’re on the verge of testing out. 

14. Take Summer Classes to Graduate Early   

Some schools offer discounted tuition prices for summer classes. If you take courses during the summer, you may be able to graduate early while incurring fewer tuition costs. 

Contact your school’s financial aid department to see if there’s a discount for summer classes. If you qualify for the Pell Grant, that may cover part of the cost of summer tuition.

15. Get a Part-Time Job   

Getting a college job to avoid student loan debt can help you pay for your living expenses out of pocket instead of relying on student loans. 

To find a part-time job, ask people you know, including professors, RAs, other students, and anyone else who may have a lead. You never know who will hear about an opportunity that fits your schedule. 

Your college may have a special job site you can access, but it’s also a good idea to check sites like Indeed, Craigslist, and LinkedIn. Keep your eyes open on campus for opportunities as well.

16. Start a Side Business   

If a part-time job with strict hours isn’t a good fit for your schedule, consider starting a side hustle. Side hustles can include anything from delivering food with Uber Eats to designing logos for small businesses. 

Ideally, you should find a side hustle that corresponds with your skills and interests. If you’re excellent at French, try tutoring French students. If you’re a good web developer, list your services on sites like Fiverr or Upwork. You’ll earn more by utilizing a specialized skill instead of doing something basic like driving for Lyft.   

17. Become a Resident Assistant (RA) for Free Housing   

After tuition, the cost of room and board is the most expensive part of attending college. Reducing how much you pay for living expenses can significantly decrease your student loan balance.

Becoming a Resident Assistant (RA) can be a simple way to get free or reduced housing, as well as a discount on meal plans. Being an RA is like a part-time job. RAs live in the dorm and enforce the rules, organize events, conduct room checks, and patrol hallways during certain times. 

18. Save Money on Textbooks When You Can  

Saving money on college textbooks can be an easy way to pay less and take out fewer loans. First, make sure you actually need to purchase a textbook. Many professors will list books that they don’t end up referencing in class.  Before you buy a textbook, contact the professor directly, explain that you have limited funds, and ask if you actually need to buy every book on the list. 

Then, compare textbook prices at sites like Bookscouter. In some cases, it may be less expensive to rent a book than to buy it and sell it back later. Make friends with students in the same major who are a year ahead of you and offer to buy their textbooks at the end of the semester.    

19. Pay Off Student Loan Interest During College  

Many lenders allow students to make payments while they’re enrolled. If you can afford to put money toward your loans while still in school, then less interest will accrue and be added to the principal.

One strategy is to get a part-time job and put that money to put toward your student loans. Even paying a small amount every month will help you pay less in total interest.

20. Graduate On-Time  

According to the US Department of Education data, only 44% of students actually graduate college within four years. The longer it takes for you to graduate, the more student loans you will likely incur.

Try to graduate as close to on time as possible. Consult your advisor to ensure that you’re taking the right classes, and try to find courses that count for multiple requirements. 

Saving Money on Student Loans After College

If you do have to take out student loans to attend college, you should create a debt payoff plan to implement after graduation. 

Here are some ways you can pay off your student loans faster:

• Student loan refinancing: Refinancing your loans to a lower interest rate can help you pay less interest and save hundreds or even thousands in total interest. If you decide that student loan refinancing is the right option, use ELFI’s Student Loan Refinancing Calculator to see how much you could save.*
• Employer student loan reimbursement: Some employers will pay part of their employee’s student loans as a company benefit. 
• Student loan consolidation: Consolidating your student loans means combining multiple loans into one. This can help you save money on interest and simplify your loan payments. Consolidation can also reduce the chances that you’ll miss a payment.
• Loan forgiveness programs: The federal government offers loan forgiveness programs that will eliminate part of your student loan balance, often after working for a particular organization or in a certain profession.