While the federal government talks a big game when it comes to making higher education more affordable, student loan debt figures show the talking points and programs do not move the needle much in the real world. The fact is, cumulative student debt for Americans has now reached a staggering $1.75 trillion dollars with $28,950 owed per borrower on average. Around 92% of student loans in 2023 were federal as well, with the remaining debt coming from private student loans.
Obviously, these figures didn’t get any better during the pandemic since students were still borrowing but federal student loan payments have been paused for more than three years. More promises have been made during that time, including Biden’s student loan forgiveness plan that would wipe away $10,000 to $20,000 in student debt per eligible borrower with federal student loans.
Not surprisingly, that’s all up in the air even today, and it’s becoming increasingly apparent that families are mostly on their own when it comes to figuring out a reasonable plan to get kids through school. While you can always choose an income-driven repayment plan for loans or try to pursue Public Service Loan Forgiveness (PSLF) with a public service job, there’s one college affordability strategy not enough people talk about.
Pay less for college, and you can borrow less, too. It seems so simple, yet not enough families consider how and why they need to be judicious when it comes to picking a college that fits in their budget.
Avoiding College Choice Pitfalls
Financial advisor and CCFC (Certified College Financial Consultant) Danny Cieniewicz of Hyperion Financial says that many poor college choices center around a handful of pitfalls that can be easily avoided. For example, he says too many families chase after a school name or prestige and think that attending a dream college is all that matters.
In many scenarios, he says families will also opt for an early decision to get into their dream school that ultimately decreases their leverage in the financial aid appeal domain. From there, the families that fall for this pitfall also refuse to apply to more affordable schools as a back-up, and this can hurt them in the appeals process as well.
Financial planner Andrew Goodman of Wall Street Alliance Group also points out that many families fail to do any research when it comes to the specific program their child is interested in. This part is definitely true but also strange since many affordable schools have celebrated programs in certain fields that could help students borrow less but get a better education overall.
The stark reality is that, for most careers, it does not matter where you earn your degree. Other than at your initial handful of job interviews, it’s highly possible no one will ever ask you where you earned your degree again.
“There are better ways for a student to stand out than just
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How To Pay Less For School
So, how can you stop overpaying for college? Give up on the idea of chasing after brand names and actually do some research when it comes to schools that offer programs in the right field.
There are a million other ways to save and get the same high-quality education, but here are some strategies that can get you the most bang for your buck.
Attend College In-State
When it comes to the differences between tuition and fees at different types of colleges and universities, the stats are very clear. You will almost certainly save money if you attend a public, in-state school versus an out-of-state school or a private college or university.
Consider these average tuition figures from CollegeBoard:
- Public four-year in-state: $10,950, $190 higher than in 2021-22 (1.8% before adjusting for inflation).
- Public four-year out-of-state: $28,240, $620 higher than in 2021-22 (2.2% before adjusting for inflation).
- Public two-year in-district: $3,860, $60 higher than in 2021-22 (1.6% before adjusting for inflation).
- Private nonprofit four-year: $39,400, $1,330 higher than in 2021-22 (3.5% before adjusting for inflation).
As you can see, attending a four-year school in your state costs less than half of tuition at an out-of-state school and less than a third of attending a private school. And remember, these tuition figures are per year, so the savings over four years can be up to six figures in tuition alone during a traditional degree program.
There are some exceptions where a more expensive school could leave you paying less, including if you qualify for significant merit aid or other types of aid. Either way, you will want to use a net price calculator for different colleges and universities so you know for sure.
Attend Community College First
Goodman says he has suggested to many of his clients that they send their kids to community college for the first two years of study. He points out that most students are just taking prerequisite classes for the first two years of school, and they often don’t know what they want their major to be at first anyway. By attending a community college the first few years, they can save tens of thousands of dollars on tuition and get a better idea of what they want to study. They may even be able to live at home and save on room and board, too.
At that point, Goodman says they can look for a school that specializes in that field that they can transfer their credits to and pick up with their four-year degree from there.
Of course, it’s not always quite that simple, and you’ll want to make sure your community college credits are fully transferable to four-year schools that are on your radar first. Either way, you can easily look at the CollegeBoard figures and see the savings. The fact is, attending a public, two-year, in-district school costs an average of $3,860 per year and even less in some states.
Look For Employer Help
College consultant Pierre Huguet of H&C Education also says that, if you’re already working or searching for a job, you can look for companies out of high school that offer to pay for an online college degree as part of their benefits.
One popular example is Starbucks
SBUX
“While some of these programs have a limited number of partner schools for which they are applicable, a growing number offer some tuition reimbursement for students attending other universities,” he said.
Start Saving Early
Finally, don’t be afraid to start saving for higher education early (or even late) if you have a kid approaching college age. Far too many families wait too long to come up with a plan, or they just figure the situation will work itself out somehow. When that happens, the “solution” often comes in the form of student loans for both the student and the parent, and that just means years (or even decades) of payments for everyone involved.
Some states offer incentives for saving in a 529 college savings plan, including tax deductions and credits. You can even get other family members involved and have them contribute to a 529 plan in lieu of other types of gifts, and you may get some support in that realm since extended family may be just as invested in helping you or your dependent avoid crushing student loan debt.
No matter what you do, don’t wait around for the government to figure this out. Despite all the bold promises you hear in the news, it appears nobody is coming to help.
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