5 Ways to Reduce Your Student Loan Debt

A student finalizes a scholarship for her graduate degree.

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One of the most challenging parts of attending college is finding a way to pay for it. Many students are graduating with a crippling amount of student loan debt. Student loans can limit what you can do after you graduate and be a real hindrance in beginning to building wealth and a solid future. Here are five ways to cut your college costs so you can reduce your reliance on student loans.

Choose an Affordable School

If you have aspirations of attending a private college or university but don't have the scholarships and grants to cover the cost of tuition, consider choosing a four-year or two-year state school.

A good state school where you qualify for in-state tuition can make attending college much more affordable compared to a higher-priced private school. Depending on your career goals, attending community college for a year or two may also help reduce the cost of your tuition.

On average, tuition for four-year private schools was more than twice as expensive as the in-state tuition for four-year public schools during the 2019-2020 school year.

Apply for Needs-Based Scholarships and Grants

It is important to fill out your FAFSA and apply for the Pell Grant (if you're eligible) each year because many schools also look at this information to help determine needs-based scholarships. Additionally, you should look at state grants and school-specific scholarships and grants.

Some universities may have scholarship opportunities robust enough to cover nearly all of your tuition. For example, students in Stanford University's class of 2023 whose family's gross family income was less than $65,000 received an average of $78,309 in grants and scholarships, which covered 99% of expenses for one year.

Scholarships aren't limited to students with perfect grades, either. Research the scholarships and grants you qualify for. Talk to your teachers/professors, your academic advisor, and the financial aid office. Each of these people may know of different opportunities that you may be eligible for.

Work While You're in School

When you work, you reduce the amount you need to borrow for school. A part-time job can help cut back on the amount you need to borrow for living expenses. You can also use the money that you make and save it to cover the cost of your tuition. Some students do better in school with a more structured schedule that includes a part-time job.

Some employers will offer tuition reimbursement. This employer-sponsored plan means they will pay a set amount toward your tuition and classes each year. They may have guidelines for the types of classes they will cover or that you maintain a certain GPA. Using this option will help you to earn money to live and cover part of your tuition.

Another option is federal work-study, a program in which you work part-time as an undergraduate, graduate. or professional student. Work-study jobs are first-come, first-serve, and aren't available at every school.

Federal work-study positions cap the number of hours you can work each week.

Find Ways to Save on Living Expenses

Many colleges expect students to live in the dorms—especially in the freshman year—but there may be exceptions to this general rule. In most cases, living on campus means you pay one price for your room, food, utilities, and internet.

When you live off-campus, you'll pay for each of those expenses separately, in most cases. If you live on your own, you could end up paying more than you would living in dorms; this is why splitting rent with roommates is crucial to your bottom line. The neighborhoods around campus may have apartments that cater to college students and allow you to sign separate leases and will help you split utilities.

Beyond splitting rent and utilities with roommates, there are several other methods you can use to track and reduce your expenses:

  • Create a budget
  • Overestimate your expenses
  • Underestimate your income
  • Try and save up a small emergency fund
  • Know the difference between needs and wants

Use Public Transportation Instead of a Car

While it is nice to have a car, it is not a necessity while you are in college. Generally, public transportation is good around universities, and you can usually find someone to take you to the store if you need to. You can use a car share service for those instances. When you skip having a car, you can save on gas and maintenance, insurance costs, parking costs, and the possible car payment.

According to the Bureau of Transportation Statistics, the average monthly cost of car ownership based on driving 625 miles per month was $386.88 in 2019. Conversely, monthly transit passes tend to be significantly cheaper. For example, 30-day transit passes in New York City and Los Angeles are $127 and $100, respectively.

Key Takeaways

  • Lowering or eliminating your student loan debt requires a comprehensive plan for reducing your college costs.
  • Choosing a public school over a private one can cut your tuition and room-and-board fees in half.
  • Scholarships and grants can cover most (if not all) of your tuition costs but you'll need to put in the research to find out which ones you qualify for.
  • Work-study programs can help reduce how much you need to borrow.
  • Reducing your living and transportation expenses can further reduce your reliance on student loans.