How To Minimize Your Student Debt

calculator moneyBy Kristy Welsh, Credit Expert at

With the yearly cost of university tuition continuing to skyrocket in the United States, many students have no choice but to borrow money to attend school.  

In December 2013, the average student loan debt after graduation was $29,400. Seventy percent of college seniors graduate with student loan debt, and a fifth of that debt is owed to private lenders.  

Entering the workforce in debt can put a real crimp on the ability to get ahead financially. Oftentimes, the purchase of a home, marriage, and even children must be postponed until some of the debt is paid. Some are surprised to learn that, should money troubles arise after graduation, student loan debt is rarely dischargeable in bankruptcy. In addition, unlike other debt, there is no statute of limitations on student loans, meaning a student can be sued for non-payment for an unlimited amount of time after graduation.  

Q.  I’m starting college soon, and I had no idea tuition was so expensive! I hear horror stories about students graduating with more than $100,000 in student loans, and I don’t want to go this way.  Are there financial alternatives to student loans? 

A.  Yes!  There are alternatives. Even though you are not intending to get a loan, the first thing you should do is complete the Free Application for Federal Student Aid (FAFSA).  The FAFSA is required to not only apply for federal student loans, but some scholarships and grants.  To get an advance peek at your eligibility for various programs, you can use the FAFSA forecaster at  


A Pell Grant does not need to be repaid and is awarded based on:

1. Your financial need, as determined by your current income and Expected Family Contribution (part of the FAFSA application) 

2. Your cost of attendance (for one year in most cases, longer for certificate programs) 

3. Whether you are a full-time or part-time student

The amount of Pell Grants is calculated by subtracting your Expected Family Contribution from your Cost of Attendance. For the 2014-2015 school year, the maximum award is $5,370. You can receive the Federal Pell Grant for no more than 12 semesters.  

For more information on Pell Grants, go to the Department of Education’s website:


Investigate employer tuition reimbursement programs. Some companies offer very good programs to their employees, often with no requirements that the employee remain at the job for a certain period of time after receiving these benefits. Starbucks is one company that offers full reimbursement for online tuition to its part-time employees.  


There are many scholarships available for different types of educational disciplines. Getting one may merely be a matter of doing a little research and applying. It’s critical to apply for scholarships early, as many deadlines occur months in advance of the fall school semester.  

Expect to supply transcripts, test scores, financial aid forms, tax returns, scholarship forms, essays, letters of recommendation, and proof of eligibility. You should also be prepared to be interviewed by the sponsor.  


Community colleges are an inexpensive way to earn an associate degree or take care of the freshman and sophomore credits needed for a four-year university. A 2012 Forbes magazine article found that community colleges are one-tenth the expense of private universities, at $2,713 annually on average.  Forbes also reported that community college students received an average of $1,700 in Pell Grants.  

Community college classes usually have smaller classroom sizes conducive to a more personalized teaching environment. One more benefit: If credits from a community college are transferred to a four-year university, only the credits and not the grades transfer to the university. That means a student has the potential to start out with a 4.0 grade point average in his or her junior year.  

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