Avoid Student Loan Debt by Not Paying Too Much for College
Are you worried about the rising cost of college tuition and the possibility of accumulating student loan debt when you graduate? It's a valid concern that many students share, but there are some simple steps you can take to avoid this type of financial burden.
Here we'll explain how to avoid student loan debt by not paying too much for college. With these tips, you'll be able to attend your dream school while maximizing all forms of financial aid.
Enter the College Search Process With Realistic Expectations
Many parents have unrealistic expectations when it comes to financing their child's education. They may encourage their children to apply to any school they want without knowing what the ultimate cost will be. This can lead to disappointment when it's time to figure out how to pay for it. For this reason, it's essential to have a realistic understanding of the cost of attending college.
Check out this college comparison spreadsheet you can use as you start researching schools. It can help simplify the process, especially when you're using net price calculators to estimate the cost of school at a particular institution after deducting grants and scholarships.
Find Affordable School Alternatives if Necessary
While attending a dream school may seem like the ultimate goal, it can come at a high cost. Applying to elite liberal arts schools that don't offer merit aid can result in a hefty price tag that puts a significant strain on your finances. For this reason, it's essential to weigh the benefits of attending a dream school against the financial realities of doing so. If needed, consider finding more affordable alternative colleges that still offer an excellent education.
Explore All Funding Options
Private scholarships may seem like a good way to pay for college, but they are not a significant source of funding. Only about 7% of school money comes from private scholarships. Instead, the primary sources of funding are federal and institutional aid. So make sure you complete the FAFSA as soon as it opens since that's the initial step in accessing all federal and school aid.
In all, it's crucial to explore every funding option to pay for college, including grants, work-study programs, and federal student loans.
ALWAYS Apply for Financial Aid
Many families assume they won't qualify for financial aid and don't bother applying. But they're missing out on thousands of dollars for school by doing this.
In 2023 alone, $3.6 billion in Pell Grants went unclaimed because students didn't complete the FAFSA. According to the National College Attainment Network (NCAN), 47% of the class of 2022, who would have been eligible for the Pell Grant, did not complete the FAFSA.
Have Realistic Scholarship Expectations
Many parents assume that their child's athletic prowess will underwrite the cost of their education. However, athletic scholarships are not as plentiful as parents and teenagers assume. Just 2% of high school athletes end up getting athletic scholarships, and only a small percentage of those students capture a full ride. It's important to be realistic about the availability of scholarships and not to count on them as the primary source of funding.
Appeal a Financial Aid Offer if it Doesn't Work for You
If you are not satisfied with a financial aid offer, you may be able to appeal to the college or university for additional aid. Normally you'll want to have a reason to appeal a disappointing financial aid award, such as a job loss, a death, a divorce, large medical bills, or other exceptional circumstances. But that's not always the case. Sometimes by just speaking with the financial aid office at the school extending the offer, you'll be able to get more money. But first and foremost, you need to be able to read and fully digest your financial aid offers.
Take on Student Loans Responsibly
As a last resort, borrowing can be an option to pay for college. But it's essential to be aware of the risks. Most dependent undergraduate students can only borrow a maximum of $31,000 with the Federal Direct Stafford Loan. Private student loans may be another option, but they require a co-signer, which can become a financial liability.
You should also have a solid understanding of what a reasonable amount of debt would be and how it can be budgeted before borrowing. Borrowing the maximum Direct Loan amount ($31,000) is a good rule of thumb for students, and parents need to assess how much they can borrow by considering factors such as their mortgage, credit card balances, debt for other children, and retirement plans. Student loan debt should be kept in sync with income to ensure that it can be repaid in ten years or less.
Avoiding student loan debt by not paying too much for college is crucial. By setting realistic expectations, finding affordable alternatives, exploring all funding options, borrowing responsibly, applying for financial aid, understanding scholarship misconceptions, and future debt management, you can ensure that your child's education doesn't come at an unreasonable cost.
Paying Less for College with Cappex
Following the tips outlined in this article will help you avoid student loan debt by keeping your college costs down. Another way to save even more money is by using our free college and scholarship search tools. Build your college list, search and save scholarships, and compare tuition and costs between the colleges you're interested in.
Start by creating your free Cappex account with the button below. We'll help you find and fund your dream college.