6 Ways To Avoid College Loans

We all know the big story: College is great, but it’s expensive.

Let’s start with the “great” part. Simply put, a college education means a big bump in income. A report by John Winters at the Fordham Institute concludes that the national mean earnings for a person with a bachelor’s degree is $92,608, compared to the national mean earnings of $50,051 for a person with just a high school diploma. However, it’s important to note that this gap varies widely from location to location in America, and there are career options for people without college degrees that exceed the earnings of those with a bachelor’s degree, particularly given that not all bachelor’s degrees translate to the same level of earnings.

College is also an incredibly powerful experience for many, as it opens them to a wider range of ideas and experiences than they likely have had up to that point in their lives. For many (myself included), it is a life-changing period of personal growth.

But what about the “expensive” part? According to a recent US News and World Report survey, the average cost of tuition and fees for the most recent academic year was $41,411 at private colleges, $11,171 for state residents at public colleges and $26,809 for out-of-state students at state schools. That’s per year. If you’re aiming for a four-year degree, multiply those numbers by four. That’s a lot of debt, and many people wind up regretting taking on that much student loan debt. Even with the best student loan interest rates and terms, they can be financially punishing.

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This creates a serious financial risk. What if a student goes to college and doesn’t complete a degree? What if they go and cannot find an area of study that works for them?

Given all of these factors, college should absolutely be on the table for most high school graduates, but alternatives should not be overlooked. There are many alternatives that set students up for financial opportunity later in life without the burden and risk of college loans. As my oldest son considers his options after graduation, college is a major part of the decision, but so are the following alternatives.

In this article

    Alternative #1: Community college for electives and core classes

    One option that significantly reduces the load of college loans is to spend a year or two taking electives and core classes at a community college, earning credits that transfer to a desired four-year school. This takes two years of tuition at a large state university and slices the cost of those years significantly.

    For example, using options available near me, a year of tuition at Iowa State University rings up at $9,320 for an in-state student, whereas a full course load for a year at Des Moines Community College is $4,800 for an in-state student, and most credits transfer to Iowa State. By choosing the community college for two years, then switching to Iowa State, a student in my area could save $4,500 per year, or $9,000.

    For us, if we were to choose the community college plus Iowa State option, his total tuition bill would go from $37,280 to $27,640, and this option works well for the majors he is considering.

    A year or two of community college can be a great option for students who are uncertain as to their area of study, as they can dabble in first and second year courses for a number of academic areas.

    Alternative #2: Trade school

    There are a wide variety of trades that people can learn directly out of high school by going to a school specifically for that trade and earning a diploma or other certification needed for that field. Fields like plumbing, carpentry, electrical work, dental hygiene, home inspection, HVAC technician, auto repair, and many others are trained via trade schools, which typically lead into positions with larger firms and eventually lead to the option of managing your own small business in that field.

    Trade schools are great for individuals who prefer hands-on work that requires some technical skill and thought, but doesn’t require being behind a desk all day, something that doesn’t appeal to a lot of people. Many trades lead to high-paying jobs, often with a comparatively low financial risk, as the cost of trade school is almost always far less than that of a university education.

    In our family, the main trade my son has expressed interest in has been electrician’s school, which is offered in central Iowa through our community college. Their degree comes at a cost of $8,609. The cost is less than a single year of tuition at Iowa State University, and is a compelling option.

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    Alternative #3: Military

    Signing up for the military offers another option after high school graduation that can set you up for a career.

    Joining the military is free, as is any training you receive while in the military. There is a lot of room for promotion within the ranks and you can easily make a career out of it. Most of your living costs can be provided by the military, too, if you choose to live on the base, and there are a lot of solid benefits. You’re also usually set up for a career after the military if you want one.

    There is ample opportunity for training and education while in the service, the option of earning a degree after serving with the help of GI Bill benefits, and real-life experience that can translate into a career after the military.

    However, the pay is low, particularly at first. The culture may not be a good fit for everyone. There’s also the aspect of war and personal safety, as part of being in the military is a willingness to put your personal safety at risk as well as being involved in military action.

    Joining the military can be a great decision for some, but a poor fit for others.

    Alternative #4: Volunteering

    There are a lot of great volunteer programs that one can participate in directly after high school. Most of them provide for basic needs (food, shelter, and so on) while volunteering, and some provide training in particular areas that can be useful after you leave volunteering.

    However, many of these programs last for less than a year and leave you back where you started: trying to make a decision about what to do with your career. A volunteer program may be a great choice for a gap year, in other words (see alternative #6).

    Alternative #5: Apprenticeship or internship

    In some situations, you may be able to find an apprenticeship, fellowship or internship in a particular field of interest directly out of high school. This may fill the summer or may last for a year or more, depending on the opportunity.

    The federal government offers a great guide to apprenticeship programs for high schoolers that can help students get a sample of what the real world is like in a number of different career paths. On a more individual level, businesses may offer internships to qualified high school students in certain areas, though these tend to be more ad hoc and less organized.

    Often, programs like these are found when the student takes the initiative and asks for this type of opportunity. For example, if you’re considering a career in a particular field, you might want to go to a business or local professional in that field, express your interest and see if they have anything available.

    This isn’t a full solution for what to do after high school. However, this type of program can easily help a student filter through some options on their plate, figuring out what the right move is. For example, if an internship really clicks with a student just out of high school, it can segue perfectly into a trade school or university experience in that field.

    In the case of my son, there is a local business that has offered summer internships for local kids who may be interested in an engineering career. This is a program he’s very interested in.

    Alternative #6: Gap year

    A final option to consider is a gap year, or a year spent with the purpose of maturing a bit and figuring out the next step. Many colleges allow new applicants to start off their academic career with a gap year, so it doesn’t mean that they have to forgo college to do this.

    There is a big risk that a gap year can be “wasted” by simply goofing off with high school friends. A successful gap year involves making a plan and executing, where the experience involves learning a new skill, volunteering (see alternative #4), or participating in an internship or apprenticeship (see alternative #5).

    A gap year can be really valuable in helping a student filter options. It can help a student figure out what they actually want to do and then commit to that path with intensity, so that they don’t find themselves two years into a college major regretting the years spent and the debt.

    Advantages of four-year colleges and universities

    The presence of these alternatives does not mean that simply going to a four-year college or university straight out of high school is a bad idea. If a student has a commitment to learning and growth, and particularly if they have a strong idea of what they’d like to do, going directly to a four-year school can be a great choice.

    The value of a four-year college experience is directly proportional to what you put into it. If you go there with the intent of determining a career path relatively quickly, learning lots of material related to that path (and simply learning how to learn quickly), building lots of relationships and experiences that can help in that career path, and becoming a more well-rounded person, then college will pay off for you in the long run. Not only that, four-year colleges and universities offer tons of subtle perks to maximize the value you get out of your time there.

    However, this requires intent and direction, and without that intent and direction, college can be a poor investment. Go to college with a plan, and you’ll leave college with a degree and a ton of earnings potential. Go without a plan, and you may drift, leaving yourself with a lot of debt and perhaps little else to show for it.

    We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.

    Trent Hamm

    Founder & Columnist

    Trent Hamm founded The Simple Dollar in 2006 and still writes a daily column on personal finance. He’s the author of three books published by Simon & Schuster and Financial Times Press, has contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and his financial advice has been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.