Student Loan Debt is all over the news right now. Will the government forgive them? Who knows. How will millions of Americans get through college and become successful adults if they are weighed down with mountains of debt before they are even in their 20s? College is a seemingly necessary evil in today’s world, but debt does not have to become a part of every young adult’s life. How can you pay for college, and walk away, debt free?
I was reading Anthony Oneal’s Book “Debt-Free Degree” last year and loved the variety of ways he gave to graduate debt-free. It is a great resource, I highly recommend anyone looking to go to college in the near future, or their parents, check it out.
With all the discussion about Student Loan Debt in the news, I thought it would be a great time to go through some of the great tips from Anthony’s book. I’m also including some others, I have picked up along the way.
Not every family is able to save up a sufficient college fund to pay for their child’s education outright. If you’re in this boat, here are some top tips to bring down that college bill:
Get Good Grades
OK, I know getting good grades is pounded into students’ heads from the moment they arrive in kindergarten. But when it comes to applying for colleges and scholarships, having good grades can really make life a whole lot easier.
Most colleges are so concerned with academic performance, they won’t even consider accepting students below a certain GPA. So in order to have the best opportunities, keep those grades up.
Extra-Curricular Activities for the Win
As important as good grades are for college applicants, being involved in extracurricular activities, that you enjoy, is just as good, if not better, for some colleges. (Here are some of the fun, free activities my family participates in.)
When it comes down to growing a successful student body, most colleges want their students to have a variety of experiences that they can bring to school.
- If you enjoy sports, play on the team. Become team captain. Run the scoreboard or keep track of team stats. Get involved in whatever way you feel brings the most value.
- If you’re an artist, get involved in drama. Participate in student art showcases. Do photography for the school paper.
- If you’re passionate about your community, volunteer. Work with your school, or even city governement, to learn how to really make a difference in the lives of others.
- Get a part time job in the industry you’re interested and build your resume for both a future career as well as a college application.
Figure out whatever you’re interested in and put yourself out there to get involved.
And for a growing number of homeschool students, like my kids, extracurricular activities can be the most important part when preparing for college. When schools don’t have access to regular grades, they need to see what students have done in order to gauge how they will fare in their school.
Find Scholarships
Finding scholarships goes right along with having good grades and becoming involved in extracurricular activities.
Many scholarships are given on merit (grades) but also involvement in certain activities or industries.
Here are some of the Best Scholarship Search Engines.
Start Early
Students can begin applying for scholarships as early as their freshman year of college, or some, even younger!
If you want to get really serious about graduating debt free, work together with your student. Create a plan for applying for as many scholarships as possible throughout their high school years.
A good plan would be for students to research and apply for 3 scholarships each week during high school. Some applications are as simple as submitting your information. Most require an essay or submission of some sort.
This amount of applications will increase the workload for your student each week, but when scholarship money starts to roll in, it will be worth it.
Concentrate on Small Money
Students often look for scholarships and only want to apply for large, full-ride awards. But one of the best scholarship secrets is to actually go for the small money.
Big companies, like Coke, may provide a few scholarships worth tens of thousands of dollars. But MANY more small and local organizations offer smaller awards every year. And all you have to do is qualify and apply.
Like the lottery, Coke may receive thousands of applications for their 3 large awards, so the likelihood of actually winning is very small.
But the local Lions Club or Baseball Lovers of Wyoming Club, for example, might offer a $500 scholarship award and have only 1 or 2 applicants! So the chance of winning are substantially higher.
By finding and applying for a lot of those smaller awards, you can not only cover your college tuition and board but might even have some extra money left over.
Look for:
- Local social clubs (Your uncle’s golf club, Odd Fellows, your neighbor’s sewing club)
- Groups supporting a certain nationality, religion, or heratage you might belong to
- Local Public competitions (art contests, beauty pagents, spelling bees, debate clubs)
- Tons of other small groups!
A member of one of my favorite Facebook groups described how she won over 20 small scholarships before attending college.
None of them were worth more than $5,000 individually, most were closer to $500 or less. But added together, she was able to pay for 4 years of college, room and board, and even had money left over.
She had to make special arrangements with the organizations to either give her cash or grocery gift cards because her schooling was taken care of already. That’s a good problem to have!
Fill Out Your FAFSA
The FAFSA is the Free Application for Federal Student Aid. It is the form every student, with their parents, need to fill out, before the beginning of every year of college. The income and asset information given in the FAFSA helps the government decide who will receive federal student aid grants and loans.
Many colleges also use your FAFSA information to decide who will receive need-based scholarships and grants provided by the school as well.
File Early
Pell Grants are the most common form of Federal Grants. (Grants do NOT need to be repaid)
Pell Grants are given on a first come first serve basis, so It’s better to apply as early as you can.
October 1st is the current first day to file for FAFSA each year. Contrary to popular belief, you don’t have to wait to file your most recent taxes to fill out the FAFSA, but it does help in order to have the most up-to-date information.
Minimize Your Taxable Income
Because Federal Grants and Loans are offered on a need-basis, it is best to minimize your reported income for the years you need to file the FAFSA.
This doesn’t mean quitting your job and becoming homeless, but you should try to minimize taxable income. Selling stocks can trigger capital gains. Taking early withdrawals from your retirement funds will add to your annual income.
If you are going to receive a large bonus at work, see if it’s possible to defer payment until after your student is done with school. But with this option, make sure you trust your company and for them to still be around when it comes time to pay you in the future.
A handy tip that we used while I was attending college: if a student’s parents are divorced and one has a significantly lower income than the other, have the lower-earning parent claim the student on their taxes. This may allow for more financial aid.
Clarify Who Owns Your Assets
If you’ve been saving for college for your student, make sure it is clear who that money belongs to.
According to the FAFSA, Students are expected to contribute more of their own assets towards their education than their parents are.
Many parents and grandparents like to open a Uniform Gift to Minors Act (UGMA) account for their child to avoid gift taxes. But by holding these accounts in your child’s name, you could be hurting their chances of need-based aid.
Instead, save for college in a “529 College Savings Plan or a Coverdell Education Savings Account. Under current rules, these are both treated as a parent’s asset, as long as the student is classified as a dependent for tax purposes.” (Investopedia.com)
For this reason, too, we are investing for our kids in a brokerage under our names. We have the power to choose when to give our kids the money instead of them automatically gaining access at 18, like in a Custodial Account. And the money is considered our assets, so it will not be judged as heavily by FAFSA as a brokerage in our children’s names would be.
Don’t Assume FAFSA Won’t Help Because of High Earnings
FAFSA is not the final deciding factor of whether or not a student will get financial aid. While higher-earning families may be less likely to get government assistance for college, that does not mean a student can’t receive grants or scholarships directly from their school or other organizations.
Many schools still require students to fill out the FAFSA to even be considered for financial aid.
So whether you think you will get anything or not, make sure to fill out the FAFSA each year, just in case.
To Be Continued…
As I was writing this article, I realized there was so much information that it was more than twice my normal post length. So, I decided to turn this into a 2 part post. Make sure to sign up for our weekly newsletter to be the first to know when the post releases next week.
(Edited: Continue to Read Part 2)
I’ll be discussing:
- How to Choose the Right School to get the most bang for your buck
- Taking advantage of work-study programs and other campus jobs to combine income and convenience while studying
- Career Options Outside of College for those who want to follow a different path.
See you next week!
What are your thoughts on attending college, Debt Free? Do you have any awesome tips to share? Or horror stories to avoid? Let us know in the comments below!
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