Tips for Parents and Students to Avoid Student Debt

The rising cost of college followed by poor education decisions can lead parents and students into a financial hole. With increasing tuition rates, even for public universities, investing prior to your childrens’ college expenses is an important factor to make the experience more affordable while trying to avoid debt. A recent study shows that from the late 1980s to 2018, the cost of an undergraduate degree has risen by 213 percent at public schools.

Mountains of student debt, deferred or underfunded retirement and misaligned career interests are only some of the severe financial consequences that can occur if parents and students don’t plan well for their future. Student loan debt represents the largest chunk of non-mortgage debt in the U.S. According to the Federal Reserve, the national student debt is approximately 1.6 billion dollars with the average student debt sitting at $37,172.

avoid student debt

The debate’s expanded from self-choice and accountability to making college education free and implementing student loan forgiveness. Currently, New York State is home to the nation’s first accessible college program where more than 940,000 middle-class families making up to $125,000 per year will qualify to attend college tuition-free at all CUNY (City University of New York) and SUNY (State University of New York) two- and four-year colleges per the Excelsior Scholarship. Bill Gates has even invested 1.7 billion dollars to try to fix the U.S. education system.

In the meantime, rather than speculating on the best way to fix the spiraling cost of college, how about doing something within your and my control – let’s avoid getting into or minimize our student debt.

Here are some helpful tips to avoid the student loan burden:

College Savings Plan

It’s never too early to start saving for college, so start now. Think about your options and decide if you can invest in your future by deferring college for a few years. If your child (or you) are already attending college, consider working simultaneously to reduce stress after graduation. Being a college student and working takes a lot of organization but prioritize your financial future and it’ll go far in helping you stay out of debt.

Choosing Your Career

Not all careers require a college education. Plan as far in advance for any career changes and go to college for the job you want to have. If college isn’t for you, there are less expensive career education options you can consider that don’t require a college degree.

Undergrad vs. Graduate School

If your goal is to attend grad school, then why not get your undergraduate at a reasonable cost? Consider saving money you would spend in a four-year university by completing the early years at a community college. This will take additional research on transferable credits, however, it may save you a significant amount of money and will help you avoid taking out large amounts of student loans.

Trade or Vocational Schools

There are plenty of fulfilling and rewarding careers that don’t require a degree. Trade and vocational schools help students develop a marketable skill that lead to successful careers in the workforce. Forbes identified 20 well-paying jobs including administrative service managers, construction supervisors, wholesale and manufacturing sales reps, electricians, plumbers, medical techs and more that don’t require a college degree.

Apply to Scholarships and Grants

Never settle and always explore your options. No two scholarships are the same and there are many scholarships/grants that are being unused due to a lack of applications. Some programs are merit-based, others are needs based and more are available after completing your first year of college. The possibilities for college scholarships are endless and there are many helpful sites that can research all U.S. scholarships available – for free!

Stick to Your Budget

Budgeting is a priceless life skill regardless of the amount of income you earn. It can be a simple spreadsheet or an online tool such as YNAB. Keys to budgeting include knowing where your money goes as well as reserving for future expected expenses and “surprises.”

Get Roommates

Although moving away to college or moving into the dorms might be fun, living costs are cheaper when you’re living at home or with roommates. Living off-campus might be more advantageous economically and will reduce dorm distractions.

Plan for Graduation

An estimated six out of 10 four-year college students don’t finish on time. Worse yet, those are students who pay the expense but don’t earn their degree. A prolonged college career from switching majors costs you in two ways: added expenses and lost earnings. Speak to guidance counselors and professors to get you on track to graduate.

High school students are expected to know what they want out of life, however, even at 25 they’re still trying to figure things out. Secure your life wisely by avoiding student loan debt today and 20 years from now. When you’re with a group of your colleagues having a drink, don’t forget to ask this question: “What did you major in college and what are you doing now?” Life is easier when you plan, budget and hold yourself accountable.

This article can also be viewed on the Reno Gazette Journal.

For additional insights on how to budget and pay for college, take a listen to NPR’s “Paying For College: What To Know Before You Go.”

About Brian Loy

Brian Loy writes insightful and inspiring articles about the ever-changing world of personal finance and the global trends that affect the risk and return on investments and shape the financial- and retirement-planning process.
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