3 Ways to Graduate From College With Little to No Student Loan Debt

Graduating from college with high student loan debt can haunt not only your long-term finances but other areas of your life, a new Gallup poll shows. The poll, jointly sponsored by Purdue University and Lumina Foundation, surveyed 11,000 students who graduated between 1990 and 2014 to test the relationship between college experience and post-graduation well-being. The results showed a correlation between high student loan debt and struggles with both finances and health after graduation.

Forty percent of students who graduated with no debt were thriving financially after graduation, a number that drops progressively to 25 percent as debt climbs to $50,000. The corresponding numbers for physical well-being drop from 34 to 24 percent. These gaps of 15 and 10 percent, respectively, stand out in the results and point to the negative impact of student loan debt on quality of life.

To get the most out of your degree and enjoy the highest quality of life after graduation, your best strategy is to graduate with as little student loan debt as possible.

Graduating College with No Debt
How to Keep Your College Costs Low

According to the latest information from the College Board’s Annual Survey of Colleges, the average public two-year in-state college tuition cost $3,264 in 2013-2014, as compared to $8,893 for public four-year in-state, $22,203 for public four-year out-of-state, $30,094 for private nonprofit four-year, and $15,130 for for-profit institutions. Accordingly, one way to reduce your student loan debt is taking credits from less expensive community colleges. You don’t necessarily have to earn all your credits this way, but you can often get general courses out of the way at a lower price before transferring to the college of your choice to complete your degree. A similar strategy is taking high school courses that count toward college credit.

Build a College Savings Fund

Another way to avoid student loan debt is to start saving now. You (or your family) can enjoy tax-advantaged savings by using vehicles such as a 529 plan or a Coverdell Education Savings Account, two of the most popular options, as outlined by Bankrate.com. You’ll find a guide to other savings alternatives at FinAid.

Even putting aside a small percentage of your income each month can add up and help you avoid student loans. If you receive regular payments from an annuity, you may be able to sell your future payments to a company such as J.G. Wentworth for a lump sum of cash now. You could then put this money toward your college savings.

Apply for Aid

The U.S. Department of Education hosts a Federal Student Aid site that outlines various types of aid that may be available to you, including several categories of assistance that don’t need to be paid back. Grants are usually distributed based on economic need or other eligibility criteria, while scholarships are typically based on merit. These two types of aid are called “gift aid,” and unlike student loans, they do not need to be paid back (except under certain conditions, such as if you withdraw from school before a semester ends).

Work-study jobs provide another form of aid that can enable you to pay off your tuition instead of letting loans pile up. For more information, talk to a financial aid office representative at your educational institution.