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12 Ways to Keep Student Loans to a Minimum

In 2012, the Institute for College Access and Success reported that two-thirds of the 2011 graduating class had student loan debt – and the average amount was $26,600.


As pointed out by FICO experts, student loan debt is a growing problem for two major reasons: consumers are carrying more student loan debt than ever before, and more federally-backed student loans are being offered to consumers with questionably low FICO Scores.


Plus, with the unemployment rate for the under twenty-five crowd hovering at twice the national average, $26,000 in student loans can become a huge burden post-graduation.


It is possible, however, to graduate college with a bright future and very little – or even no – student loan debt. It just takes more work and planning before and during college to make this happen. These twelve tips can help:


1. Know what you want to do

Around 50% of college graduates will change their major at least once during their college career. It’s not surprising, considering how little real experience freshman students might have with their chosen field. However, changing majors can be costly in terms of student loans.


If you change majors dramatically – from, say, Chemistry to History – you’ll most likely have paid for courses your new major doesn’t require. Plus, you’ll have to spend more time taking the necessary courses for your new major, adding time – and tuition expenses – to your college career.


This doesn’t mean you need to have a clear idea of your future from the start. But if you aren’t sure what you want to do, start college as an undeclared major. Then, spend time getting university-wide prerequisites out of the way while you explore your options.


2. Carefully compare your options

Public universities are, in general, much more affordable than private schools. The 2011 College Board report showed that the stated price of a four-year private university averages $38,589 per year. The price of an in-state public school, on the other hand, averages just $17,000.


That means you should definitely look at your in-state, public school options. But you can also check out private universities that interest you – many offer great grants and scholarships, which could make the actual cost lower than public schools.


Bottom line: apply to your dream schools, but then carefully compare how they line up financially with options closer to home.


3. Finish school early

This will save on both tuition costs and other college-related expenses. Graduates of the private Santa Clara University could save $13,000 for graduating one quarter early. And in-state University of California students could save $6,500 by knocking off a semester of school.


Besides saving on tuition, early graduates could save on room and board and other living expenses. Plus, they’ll theoretically be able to get into the workforce sooner, boosting their earnings over other classmates who graduate in four or more years.


4. Work during college

Even if your minimum-wage work-study or off-campus job doesn’t pay much, every little bit helps. Students who don’t work may use student loans (or student credit cards) to pay for rent, food, entertainment, car insurance, and other non-educational items. So in the end, they’ve taken out much more in student loans than required for tuition.


Plus, there are educational benefits to working part-time during college. Recent studies show that students who work 20 hours a week or less during college are more engaged, show better leadership qualities, and may even have better grades.


5. Get credit for pre-college work

Trimming required coursework down to the bare minimum could help you graduate early. Begin by taking as many Advanced Placement (AP) and International Baccalaureate (IB) classes as possible in high school.


Also, check out dual-enrollment classes, which count for both high school and college credit. Dual-enrollment courses offered either through your high school or a local community college are usually much cheaper than comparable courses from even a public university. Just a few credits now reduce the courses you’ll need to take later, thus cutting college costs.


6. Start at a community college

The average cost of a public, two-year community college is about $3,100 per year – significantly cheaper than a public four-year university. Some families can pay for community college expenses out-of-pocket on a payment plan, negating the need for student loans for at least the first year or two of school.


Have a plan for transferring to a four-year university, and talk to advisers there about which credits are most likely to transfer. Transferring community college credits to another public institution is normally simple, but transferring those credits to a private school can be more complicated.


7. Check out co-op options

With the rising costs of college and employers’ stronger emphasis on real-world experience, a co-op educational experience might be for you. Students in co-op programs offered by major universities work in their future career fields during college, often alternating periods of full-time work with periods of full-time study.


Co-op students are usually paid decent wages for their work – sometimes even enough to completely cover college tuition. Plus, co-op students gain real-world experience, and many are hired right out of school by their co-op employer.


Another bonus: recent changes in federal student aid laws exclude co-op income from financial need calculations. Whereas a regular summer job could keep you from qualifying for a Pell Grant or other free aid, co-op income will not.


8. Live at home

Sallie Mae’s 2012 How America Pays for College survey showed that 51% of students live at home during college. Room and board costs vary considerably from one college to the next, but these costs have risen at a much faster rate than inflation in the past two decades. In the 2012-13 school year, room and board estimates for a double dorm room and full dining plan were about $9,200 for public colleges and $10,500 at private schools.


You can cut out most of your living costs by staying at home, even if you have to pay for transportation expenses to commute to school. You’ll save even more if you schedule your classes on the same days, so you have to drive to campus less often.


9. Always look for scholarships and grants

Many college-bound high school students spend a great deal of time during their junior and senior years applying for scholarships and grants.

What you may not know is that many scholarships are available for students already in college, as well. Keep tabs on scholarship websites, which will send you scholarship opportunities based on your personal and educational information. And don’t forget to fill out paperwork for any renewable scholarships you are granted as a freshman.


10. Cut back on variable expenses

Federal student loans can be used for any expenses related to education, including room and board, books, and sometimes even electronics, transportation, and other expenses. Private student loans can be used for nearly anything once you qualify for the loan.


Just because you can use loans for other expenses, though, doesn’t mean that you should. Cut back on student loan borrowing by reducing variable expenses like these. Use an older laptop instead of buying a new one. Buy your books used, or borrow them from the school library when possible. By reducing these expenses, you’ll reduce your need for student loans.


11. Don’t forget about tax credits

When it comes to tax time, many Americans forget to apply for tax credits for educational expenses. But credits like the American Opportunity Credit, the Hope Credit, the Lifetime Learning Credit, and other tax deductions can be a big help. These credits could reduce your tax liability – or even give you more money back – so that you can better afford college.


Talk to your tax preparer about the tax credits you may be able to claim. Then, use the money you save to pay for college out of pocket, reducing your need for student loans.


12. Only take the loans you need

Even if you use all of these options to reduce your need for student loans, you may still need to borrow money to go to college. Often times, you’ll be offered more than you need, and it’s tempting to take the extra just in case. But accepting just the amount of money you need to cover essential expenses will help you keep your overall student debt burden low between now and graduation.


If you’re wondering whether all this work is worthwhile, just talk to a recent college graduate struggling with student loans. As a high-school student or recent high-school graduate, it can be difficult to understand just what impact $20,000+ in student loans has on your future. But, trust me, anything you can do to reduce your student loan debt – and secure your own financial future – is well worth your time and effort.


In case you were wondering, it took me nearly 20 years to pay off $55,000 in loans from law school.


Rob Berger is a litigation attorney and founder of the popular personal finance blog The Dough Roller.


  1. I am in my mid 40’s and having trouble finding information on student loan options for someone my age. any ideas?

  2. yes if you go to you can apply for a grant and the school you choose financial aid center can help you with which student loan is best for you

  3. Jose Cardona says:

    My tu fico is at 544 with defaulted student loan which is already under a rehabilitation program, going on 2 months. I only owe 20k. 1 collection account Paid but need to remove and other bad acc i need to try pfd.
    Right now I’m in a position where I can fork up to 1k biweekly without hurting my finances. Will it help my score if i reduce my debt to lets say 10k then continue paying as agreed, 200 a month, to keep the loan, since it will be oldest account in good standing after 10 month rehabilitation.
    or how low can i go, pay off till 5k, 1k?


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