11 Savvy Alternatives to Avoid Student Loan Debt

Student loan debt has hit an unbelievable new peak in the United States! According to the Federal Reserve Bank of New York, Americans now hold $1.31 trillion in student loan debt. Credit card debt comes in at ~ $905 billion (Nerdwallet, 2017). Both numbers are astounding, but make no mistake, student loans are the new credit card. Let’s explore why this is happening and discuss some alternatives and preventive measures.

 

Mentality

I see one primary issue related to student loan debt – our mentality. Our beliefs about education and how we pay for it needs to change. There are some that view education as a solution to all problems. While I support education and continuous improvement, I don’t support getting it at all costs. So many people openly make decisions (without proper financial assessment) to obtain 2 or more degrees and even make changes in their career that necessitate going back to school several times. We aren’t called to be “professional students.” We should be exercising wisdom in our finances. Finding a cost-effective way to fund your education is well worth the hassle.

 

Reality

Our mentality also affects our ability to take (or not take) action. There are those that don’t want to fund college with student loans, but don’t take the necessary steps of exhausting all possible options available. The same erroneous thinking uses the “investment” or “ROI” argument as an excuse for student loan debt. Guess what though? When you graduate, the gift from your lender is payments (usually with interest). This is reality, ladies and gentlemen. Given the numbers mentioned above, people clearly are struggling to pay back those seemingly helpful loans.

 

Misuse

Even more frightening is the fact that people are using the student loan money like cash while in school. Taking friends out to dinner and going on vacations. This is a dangerous practice that needs to stop. Using student loan money is akin to using a credit card, in that it’s still a loan and will be repaid with interest. We’ve discussed the problem enough, so let’s talk about alternatives and solutions.

 

  1. College Funding – Parents, save money for your kids’ college. Start while they’re young. Two really good options are a 529 Plan and an ESA (Education Savings Account). These are tax-advantaged funds used to cover future education costs.
  2. Scholarships/Grants – This one is more obvious, but there are literally millions of dollars available to students in the form of grants and scholarships. The key is to apply, apply, apply. You should check out the story of Christopher Gray. He won 35 scholarships and earned ~$1.3 million in scholarship money simply by researching and applying. See his story here.
  3. Community College – The first two years of school typically consist of core classes. You can save money and knock out your requirements at a community college, then transfer to your dream school.
  4. Joint Enrollment – This is a prelude to option 3. Many high schools partner with area colleges and allow students complete coursework that gets counted as core and/or elective credit. Imagine your son or daughter entering college with a year or two already on the books.
  5. Public vs Private & In State vs Out of State – Generally speaking, it’s cheaper to go to a public school over a private school, and in state over an out of state school for college. Click here (CollegeBoard, 2017-2018) for some eye opening statistics on college cost trends.
  6. Resident Assistant (RA) – Work in the housing department of a college or university as an RA to help pay your housing expenses. The responsibilities include supervising other students living in a group housing facility.
  7. Work Study – Programs such as the Federal Work-Study provide part-time jobs for students in need, helping to offset education expenses.
  8. Employee Benefits – If you’re considering grad school, ask your employer if they will pay for furthering your education. This could even be a deciding factor for what company you choose to work for.
  9. Checkmark vs Prestige – Research your desired industry to find out if the school you get your degree from matters. This can affect undergrads but usually comes into play with those getting masters and doctorate degrees. In some professions it does matter where you go. But for many, the fact that you have the degree is more important. Remember, dollar signs hang in the balance of this decision.
  10. Certifications – Many different education models are being birthed in this information age. Lots of professions have certifications that can be pursued instead of a traditional degree. Really take a look at these certification options if they are available in your dream profession. In some cases, you can begin or even advance your career a lot faster than you think.
  11. Education Alternatives – Through entrepreneurship and innovation, many companies are beginning to offer strategic employer placement partnerships or bootcamp immersion courses rather than traditional 2- or 4-year degrees, at a fraction of the price. Some programs to check out in this space are Lumerit Scholar, MissionUand Tech Talent SouthLots to come in this rising segment of non-traditional education. Google will be your friend here.

 

A Call to Action

Soldiers, student loans are absolutely burdening families at alarming rates. And it’s                              certainly going to be an uphill battle. What steps are you willing to take to thoughtfully                          consider higher education for your children?