In 2015 the average student loan reached $35,000 up sixteen percent in two years. Twelve percent of former students are in default. Many are just making minimum payments. This is not sustainable.
Here are fifteen options to avoid or minimize student loans:
Scholarships
Scholarships, unlike student loans, really are free money. They are described as gift aid. There is no requirement to pay the money back in the future. The aid can come from federal or state governments, colleges or universities, employers, civic organizations, or private sources. Gift aid can be based on the family’s financial and economic status. (This is called need based.) Or it can be based on academic achievement or other talents and abilities. (This is called merit based aid.)
Spending time applying for scholarships and grants makes good economic sense. If you spend forty hours working on an application and win a $1,000 award, you just made $25 per hour tax free. Applying for smaller scholarships makes sense because there is less competition, and it is good practice.
Grants
Grants, like scholarships, are free money—they do not need to be repaid. The sources of grants include:
• Federal government
• State government
• Universities and colleges
• Private sources including public agencies, quasi-public agencies, private companies, corporations, and foundations

Each of these entities have their own procedures for application. It is important to understand and meet the exact requirements for each specific grant. The financial aid office of your college or university will be a key source of help. Also contact your high school guidance counselor and the local PTA.
Improving Test Scores
Test scores, PSAT, SAT, ACT, etc. are an important part of the college application process. Often good test scores can lead to significant gift aid. It pays to take this seriously. Be aware that you are competing with students who started taking practice tests in the seventh grade. There are fourteen-year-old kids who have scored 35 or 36 on the ACT. If you are reading this as a junior in high school, you need to catch up. Set aside a specific period (or periods) of time each week to prepare. Check with your high school guidance counselor on what is available at your school, e.g. practice tests, prep classes, tutoring, etc. Make use of free or cheap materials available online or through bookstores, e.g. Amazon.com. If your goals are lofty, you might want to consider professional help for preparation or tutoring.
Dual Enrollment
Dual enrollment classes let students earn high school and college credits for the same course. Some students go to a college campus—usually a local community college—while others study at their own high schools. Nationally more than a million high school students are taking at least one college class.
Earning college credits during high school has a major benefit. College courses are often available at no cost or significantly reduced rates. Planning is important. To get the full benefit of these “bargain” credit hours it is necessary to understand how the hours will transfer to your future alma mater.
Finishing in Four
Would $70,000 be enough money to motivate you to do some careful planning? That is how much that fifth year of college is going to cost. A year of living and studying on campus at a state university is about $25,000. And, if you had finished in four years, you could have gotten a job and earned $45,000.
Most college students do not graduate in four years. There are a variety of reasons, but changing majors is near the top of the list.
You need to choose a marketable major and create an academic plan that will serve as a guide through that maze that leads to a bachelor’s degree in four years.
Advanced Placement
Enter college as a sophomore. It’s not magic. It’s a simple numbers game. If State U costs $25,000 per year, that means it’s going to cost you $833 a credit hour ($25,000/30 credit hours) to become a college sophomore. High school juniors and seniors can take Advanced Placement tests each May for about $89 a pop. With careful planning and lots of studying you can become a sophomore for less than the cost of three credit hours at State U. You must target specific colleges when planning for AP credits. Every school makes their own rules.
Community and Branch Colleges
Fifty years ago a four-year traditional college was the “sweet spot.” Today the “sweet spot” is the community college. Community colleges can deliver a college credit hour for less than $150 per hour as opposed to $800 per hour from a four-year traditional college. (Local, state, and federal tax dollars help drive down community college costs, and the community college should be close enough to home to make commuting practical for most students.)
Four out of ten students heading to college enroll at one of the sixteen hundred community colleges available in the US. This can be a hard pill for a teenager to swallow. Attending community college doesn’t enjoy the social status of attending a four-year traditional college. You may want to go where your friends are going to school, and it’s normal, upon graduating from high school, to be itching to get a taste of freedom.
However, the financial arguments for community college are compelling. Consider attending a community college to complete your basic education requirements. Then, after two years, transfer to a traditional four-year college. (Check to see if the community college you are considering has a Guaranteed Transfer Admissions Agreement with the four-year traditional college where you intend to complete your BA.) If you need to work, community college is more flexible than the four-year traditional college. If your high school grades are a little shaky, no problem. Community colleges have an open-door admissions policy. You can enroll and work to improve your GPA. Save even more money. Two-thirds of students change their major at least once. The tuition rates are low enough at a community college that you can afford to experiment, find your passion, and target a future career.
A branch college is going to cost more than a community college, but it is a price performer. There is less anxiety of “will the credits transfer.” (You still need to verify the details.) The tuition costs at a branch college might be half that of the main campus, plus class sizes are usually smaller. Branch colleges are more likely to have on-campus housing than community colleges.

Online Learning
According to a 2012 study from the Babson Survey Research Group more than 6.7 million students around the country are taking at least one online course. Traditional online learning has been around for some time.. The courses carry credits. Usually the student has the flexibility to access the course at his convenience.
Online learning has the potential to reduce costs. A credit hour taken online will be in the $300-400 range. Your online options include four-year traditional colleges, e.g. the University of Cincinnati has over thirteen thousand students enrolled in online courses, community colleges, or for-profits, e.g. University of Phoenix, Kaplan University, DeVry University, etc.

Competency Based Education

The idea of competency based education (CBE) is gaining traction. In the traditional model students sit through eight semesters of classes to earn one hundred-twenty credit hours and a bachelor’s degree. (Increasingly this has been translating into five or more years of class time.) Regardless of what the student learns, if she earns a passing grade, the institution rewards her with the requisite credit hours. Fifty years ago prospective employers could, with some confidence, use the bachelor’s degree as a credential for hiring.
Too a large extent this model has outlived its usefulness. Too many young people are going to college. The quality of education has deteriorated. Too often the skills gained don’t match the skills demanded. The cost of education has sky rocked, and the return on investment has plummeted.
Enter CBE. The CBE model breaks out of the constraints of “the course,” the semester, and the instructor’s pace. The redundancy inherent in covering material the student already knows is eliminated. A key distinction of CBE is the modularization of learning. By using online technology and escaping the constraints of the course it becomes possible to stack modules to meet the demands of a wide range of disciplines.
CBE awards credits based on the student’s demonstrated mastery of the skills, abilities, and knowledge required in the area of study. The cost of a bachelor’s degree is a fraction of the traditional four year college. Most schools offering CBE use a subscription model—a fixed price per unit of time. The student determines the cost of the number of credits earned by their pace.
Western Governors’ University, who TIME magazine called, “the best relatively cheap university you’ve never heard of,” was one of the pioneers of CBE. They accepted their first students in 1999. In sixteen years they have conferred 43,000 degrees.
More recently the University of Wisconsin has created a CBE program called the Flexible Option. With the entry of a major traditional university into the fray you can expect CBE to continue to gain acceptance.
For-profit Schools

The for-profit colleges, sometimes called proprietary schools, have been around for more than one hundred years. The schools, often owned by publicly traded companies or private equity firms, include such names as the University of Phoenix, Kaplan College, and DeVry University. Their typical business model is heavily dependent on aggressive marketing and recruiting. (It is not unusual for the for-profits to spend more money on marketing and recruiting than on student instruction.)

The for-profits are selling flexible schedules, convenient locations, and lenient admission standards, not necessarily low costs. Their target students include low income working adults and ex-military (with access to G.I. Bill benefits). Often their recruits are first generation college attendees who lack a sophisticated knowledge of their advanced educational opportunities.

The schools are heavily dependent on taxpayer dollars. Ninety-six percent of students get Pell Grants, federal student loans, or both. Per the Institute for College Access and Success, “From 2010 to 2012 students at for-profits made up nearly half of student loan defaults nationwide—almost four times their share of college enrollments.” Fifty-four percent of students drop out in less than eighteen months.

Employer Benefit
Find employment after high school with an employer who has a college tuition benefit. Live at home. Scrimp and save. Work and study. Grind out a bachelor’s degree worth $100,000 for pennies on the dollar. This is a tough option that will take a long time. It will require a lot of perseverance. Most young people will give up or lose focus. But it can be done.
Banks and insurance companies are a good place to start looking for an entry-level job with this type of benefit. Don’t overlook the obvious. Some colleges have a tuition benefit for their employees.
Join the Military
The military provides many options for helping pay for college. Many colleges have a Reserve Officer Training Corps (ROTC) program that will provide full or partial scholarships to those who qualify. Members of the National Guard are eligible for tuition assistance. However, plans vary for each branch of service and each state. (Check the details before you make any commitments.) Active duty and reserve military have a tuition assistance benefit while they serve. The program covers 100% of tuition and fees. Veterans can attend college on the GI Bill. The post 9/11 GI Bill provides veterans with full tuition, a book stipend, and a monthly housing allowance.
While there are free MREs, there is no free lunch. Uncle Sam wants you to spend some time in the service of his country in return for helping pay the school tab.
Commute
Living at home and commuting will save money. Obviously you have to be lucky enough to be within reasonable driving distance to an appropriate college. You are going to miss out on much of the “college experience,” but you will save $5,000 to $7,000 per year versus college room and board that runs about $10,000.

Be a Cheapskate
Are you in college to live a resort lifestyle or to walk away with a BA and minimal debt? If you have the willpower and creativity, you can save thousands. The trick is to differentiate between lifestyle dollars and education dollars. After your freshman year find three like-minded, compatible college friends and rent a bare bones apartment near campus. Skip Chipotle’s and cook at home. Dump your car and car expenses. Rent textbooks from Amazon.com by the semester or take advantage of open source code books. Some colleges have book exchanges. Determine whether a smart phone is a need or a want. Buy your supplies at WalMart and Target not the campus bookstore. Take advantage of every student discount, e.g. a no-fee bank account. And skip spring break at Cabo. Does this sound dreary? It depends on your mindset. If you are thinking four years into the future and visualizing avoiding $10,000 in student debt, the money you save will make the payments on a very nice car.
Work
The last option to be considered is called “work.” There is an option on the FAFSA to request a work study job. It doesn’t cost anything to check this box. Work study is need based, but it is awarded generously. You make some money, and the earnings have no impact on your financial aid application.
Then there is the old fashion kind of work. If you check into a hotel in a college town late at night, chances are the desk clerk will be a student holding down at least one job—including a regular overnight shift—and trying to work through college while napping between classes.
Working your way through college in four years with a minimum-wage summer job and part-time campus work study—with little to no family assistance or need-based financial aid—is an outdated concept. But in combination with other strategies that paycheck can help minimize those student loans.
You will be receiving college awards letters in the spring of your senior year. At that point in time it’s too late to start exploring these ideas. If it is possible that any of these options are going to come into play because of financial restraints, start the research and planning early.