Key takeaways:
- Many take out student loans to help afford the cost of college, which averages $38,270 every year.
- Some alternatives to student loans include scholarships and grants, work-study, and savings.
- Complete the FAFSA each year to be considered for federal grants and institutional scholarships, which don’t have to be paid back.
With the rising cost of tuition, funding a college education can be challenging. On average, students pay $38,270 per year for tuition and fees, housing and food, and allowances for books and supplies. While student loans can help cover the cost, interest rates mean you’re paying more in the long run for an already expensive education.
Student loans: the stats
Student loans must be paid back. Interest rates, repayment terms, and forgiveness options depend on the lender, borrower, and loan.
However, college is already expensive – add interest rates to the pile and you’re paying thousands or tens of thousands more on your education in the long run.
According to the Education Data Initiative, as of 2024:
- Student loan debt is at a total of $1.814 trillion in the United States including private and federal loans.
- Students need to borrow nearly $32,000 to pay for a bachelor’s degree.
- 20% of adults have outstanding student loan debt, averaging $39,075 each in federal loans. If you add in private loan debt, the mean could be as high as $43,673.
- 28.6% of undergraduates accepted federal loans.
- 53.3% of students will use federal loans at some point during their 2- or 4-year programs.
Thankfully, there are ways to pay for college without loans – here are eight examples
How to pay for college without loans
Whether you have enough savings or you need financial assistance to pay for college, always complete the Free Application for Federal Student Aid (FAFSA). It’s used to determine who receives federal grants and loans, and most colleges also use it to decide who will receive need- and merit-based institutional scholarships. The earlier you complete it, the more you may be eligible for.
Here are eight ways you can pay for college without loans, especially if you’ve completed the FAFSA:
1. Scholarships
Scholarships are free money – they don’t need to be repaid and there’s no interest to worry about.* You can find scholarships through federal and state governments, universities, private organizations, and even local businesses. They may be merit-based, need-based, recurring, or one-time awards.
2. Grants
Like scholarships, grants don’t have to be repaid, except in certain situations, and come from federal and state governments, universities, colleges, and some non-profit organizations. You need to complete the FAFSA for many of these, including the Federal Pell Grant, as – unlike scholarships – they tend to only be need-based.
3. Work-study
A federal student aid need-based program, work-study allows you to earn money through approved jobs while studying, either on campus or through a college partner. You need to complete the FAFSA and opt in to consideration for the program. Spots are extremely limited, and you can only earn up to a certain amount as determined by your school and financial need.
4. Part-time work
If you weren’t selected for work-study or you need more, you can apply for a part-time job. Many employers in college towns understand your schedule and are willing to work around it. Some colleges even have select positions specifically for their students. Make sure to find balance between your work and academics.
5. Employer sponsorships
Some employers offer scholarships, education benefits, or tuition reimbursement to its employees. Exact terms and eligibility criteria depend on the company, but many require the individual to work for the company for a set number of years after graduation. If you don’t meet the expected requirements, you may have to pay the money back.
6. Military
Programs like the Military Tuition Assistance Program pay active-duty service members up to 100% of tuition expenses and there are over 1,900 colleges that offer service members a chance to earn their degree. Additionally, veterans and their dependents may qualify for GI Bill benefits through the Post-9/11 GI Bill. This covers up to 100% of college tuition and provides up to $1,000 monthly rent for qualifying students.
7. Fundraising
Don’t underestimate the power of community and technology. Start an education fundraiser on GoFundMe or a similar site to get help with your tuition and share the link with friends and family. Explain your “why”—why you aspire to go to college, your challenges, and how the funds will help you reach your goals.
8. Savings
Using savings rather than student loans can save you hundreds or even thousands of dollars in interest. For example, 529 plans are tax-advantaged investment accounts that students can use towards college and education-related expenses. They require an account holder to open years in advance to maximize benefits. The earlier the plan is established, the more time it has to accumulate money and interest.
But even savings accounts, with cash from your birthday or holidays over the years, can be put towards college expenses and help you save money in the long run.
When should you take out student loans?
In many cases, students still aren’t able to cover the full cost of college with the alternative methods. In this event, you may need to take out loans to fund the gap.
If you need to take out loans, always take out federal student loans first. Federal student loans tend to have much lower interest rates, more favorable repayment terms, and more forgiveness options compared to private student loans. With private options, you’ll likely need a cosigner or a strong credit score and income yourself.
Private student loans can help bridge the gap between what you have and what you need, but always explore alternative funding options first before accepting or applying for loans. Complete the FAFSA each year. You might discover your financial aid packages cover all of your expected costs without needing to borrow anything.
Disclosures: References to resources or organizations listed in this article do not constitute or imply endorsement or support by Citizens.
*While a scholarship does not have to be repaid, there may be other obligations associated with the scholarship.
