For most students pursuing a Bachelors or other higher education degree, necessitates taking out educational loans.  There are ways to reduce or avoid educational debt. I believe you should actively look into these opportunities to eliminate debt.  First, low or no debt allows you to invest money for financial independence. Second low or no debt gives you flexibility in the jobs you pursue.  Third, low or no debt enables you to give money and time to causes that matter to you. Consider these ways to eliminate educational debt.

1. Apply to college.  Get accepted. Defer a year to work and save.

I strongly recommend applying to colleges your junior and senior year of high school.  Make a selection of where you want to go, and accept the offer. Then write a letter requesting that you defer a year or semester.  I, in fact, did this. However, instead of working, I participated in a year-long service and learning opportunity outside of the United States.  This was a great opportunity, but I sometimes wish I had worked that year, and done the service year at another point.

If you are able to live at home, or pay minimal food/housing costs/transportation ($500/month), but earn $15/hour, at the end of 12 months, you will have grossed $30,000.

Calculation:  $15 hour x 40 hours/week x 50 weeks a year – I assume you work an entry level job that does not pay you for time off, so I remove 2 weeks a year for vacation/sick leave where you don’t earn income

I assume you will pay tax on this income.  Your employer withholds approximately 7.65% of your paycheck in FICA taxes, and you pay income tax at approximately 20% (combined Federal and State) after the Standard Deduction of $12,000, which reduces your earnings by $5,895.

Calculation:

FICA: $30,000 x .0765 = $2,295

Income: ($30,000-$12,000)*.2 = $3,600

Total Tax: FICA + Income = $5,895

Subtract out living 12 months of living expenses and taxes, and you will have earned $18,105 toward education.

Calculation: $30,000-($500*12)-$5,895 = $18,105

2. Get terrific grades and nail the SAT.  Score a scholarship.

I worked extremely hard in high school, and graduated with a GPA just shy of 4.0, and did well on the SAT.  My family was also low-income. I received $10,000/year in academic scholarship and $10,000/year in grants from American University.  That reduced my college expenses by $20,000/year.  I hear a lot of people bemoan the fact that it’s so hard to get scholarships.  I agree with this. But I challenge those same individuals to study in the summers, in the evenings, on weekends.  You may be surprised how much higher your grades are. Aim to be in the top 5% of your high school graduating class if you are of at least average intelligence.  Aim to be in the top 10% of your graduating class if you are below average intelligence. It’s amazing how putting in extra hours of studying make up for intelligence. Trust me, I’m no Einstein.

3. Take college courses in High School, and/or go to Community College the year after high school.  Reduce your 4-year degree burden by 1-2 years.

A friend of mine did this.  She went to Northern Virginia Community College for part of her Junior year of High School and all of her Senior year of high school.  She received dual credit for High School and college. She then transferred to Virginia State College, and graduated in two and a half years.  

4. Go to a less expensive school.

I went to private institutions for both my undergraduate and graduate degrees.  My undergraduate degree at American University cost roughly $32,000/year (tuition and student expenses only) around the time I graduated, and my graduate degree cost roughly $40,000/year.  Unless you have a specific rationale for going to an expensive school, like receiving a generous scholarship, practice the same safety as when your clothing is on fire: Stop, Drop, and Roll.  Stop applying to expensive schools.  Unless you are getting an engineering degree from a top university (top 20 in the field), you won’t earn much more with the degree compared to a much lower priced degree.  Drop your standards until you find a school closer to your price range.  Roll with the academic process, but focus on getting a paid internship, good grades, and making connections through the alumni association.

5. Apply for Federal Student Aid, obtain direct federal subsidized loans.  Pay off as soon as you can after you graduate.

I also did this.  I graduated with approximately $17,000 in subsidized student loans.  You do not pay interest on subsidized loans while you are matriculated in an accredited degree-seeking program.  When I graduated, I paid less than 3% interest on my loans. If I paid off the loan in three years, I would only pay an addition $1,576.36 to borrow that money.  

The key is getting a low rate, and paying off the loan shortly upon graduating.  Yes, you can pay off $18,576.36 in 3 years. You need to pay $119/week to pay that debt off.  Even if your living costs triple, compared to my $15/hour example, you still have over $6,000/year to put toward debt.  And most college graduates will earn more than $30,000 upon graduation.

Calculation: $30,000-($1,500*12)-$5,895 = $6,105

For full disclosure, I took much longer to pay off my loans, using a graduated plan.  The reason for this was that my rate on the loans was less than 3%, and I was investing in my employer 401K plan, with a focus on putting as much away between ages 25-35 to benefit from compounding interest.  I paid off the remaining $8,000 about 8 years after graduation.

Note: You have to apply using the FAFSA every year. https://fafsa.ed.gov

6.  Find a repayment program through your employer.

Even if you graduate with student loans, there are some options for repayment through your employer.  

Teacher: If you are a teacher and teach at a low-income school, or a particular subject, you have access to a variety of loan forgiveness programs.  Read more 

Employers: Some employers are offering student loan repayment programs to employees.  Just like paid maternity and paternity leave, the number of employers offering student loan repayment is increasing, but they are still in the distinct minority.  NerdWallet compiled a list of employers who offer repayment benefits.  Read more 

Counting on someone else picking up your debt should only be a component of your strategy to eliminate debt.  It is always wise to assume the responsibility will be yours to manage, reduce, and eliminate student debt.

Photo by Kyle Glenn on Unsplash

Teacher Loan Forgiveness:  https://www.creditdonkey.com/loan-forgiveness-teachers.html

NerdWallet Employers who offer repayment: https://www.nerdwallet.com/blog/loans/student-loans/employer-student-loan-repayment/