Here’s a dark underside to the already grim reality of student loan debt: It’s not just college graduates who are drowning.
College dropouts are holding part of the collective $1.5 trillion in outstanding student loan debt in the U.S. Unlike the grads, these folks owe money on their college loans but have no degree to show for it.
Borrowers who don’t complete their degree are three times more likely to default than those who graduated, according to the U.S. Department of Education. Without a degree to propel them into a better-paying job, it’s easy to see how these borrowers end up in a debt spiral with no end.
5 Ways to Minimize Student Loan Debt
It’s a terrific scenario to avoid at all costs. Here are five strategies to keep you from owing lots of money on a degree — whether you complete it or drop out.
1. Fill Out the FAFSA
If you’re even thinking about setting foot on a college campus or enrolling in an online degree program, go no further before filling out the FAFSA.
That’s the Free Application for Federal Student Aid. It determines your eligibility for federal and state loans and grants based on factors such as your earnings and your parents’ income. It’s a crucial step to determine what aid you can qualify for — in fact, many schools require it even if you’re not taking out loans.
It can mean the difference between taking on loans or qualifying for grants that don’t have to be repaid — or qualifying for federally subsidized student loans that do not accrue interest. That savings helps whether you finish school or not.
Filling it out requires gathering some paperwork, but it’s a must.
2. Consider the Bargain That Is Community College
Including tuition and applicable fees, the cost per credit hour at a four-year institution is $301.23, whereas a two-year community college costs $108.10, according to a Penny Hoarder analysis of National Center for Education statistics.
The average bachelor’s degree requires 120 credit hours, meaning a four-year education comes with a $36,148 price tag.
But if you complete the first 64 hours at a community college, you’ll pay $6,918 to earn an associate’s degree, then $16,869 to complete your bachelor’s degree at the four-year college for a total of $23,787.
That’s a savings of $12,361.
Even if you are borrowing for college, attending community college can allow you to borrow a lot less. What’s more, it’s a lower-stakes option for students who may not be entirely sure what they want to study or what degree they might pursue. All the better to figure that out without paying university prices.
3. Consider an Alternative That Pays…
We’re way beyond the idea that you have to go to college in order to be successful, right? The vast field of apprenticeships is evolving, and you might be surprised at the opportunities available now.
Apprenticeship programs, as defined by the Department of Labor, require participants to earn wages from an employer as they train. Throughout the program, which can last one to six years, participants must work under the guidance of another employee and must earn an industry-recognized credential.
In the United States, the building trades, such as carpenters, plumbers and electricians, have historically used the apprenticeship model. But as the model evolves, apprenticeships offer an entrance into fields that participants may have previously considered beyond their reach, such as engineering and technology.
4. …Or Just Don’t Go to College
Seriously. There are some great jobs out there that don’t require a four-year degree. That means you don’t take on $40,000 worth of student loans, only to graduate with that huge anchor weighing you down. Or worse, take on the debt but drop out and be really stuck.
The Penny Hoarder looked at careers that are projected to grow faster than the job market as a whole, the median annual pay and how that pay has grown. To show you where the best opportunities lie across the country, we also looked at the cities with the largest concentration of each occupation.
The result: Our list of the 10 Best Jobs of 2019 That Don’t Require a Bachelor’s Degree.
5. Get the Boss to Pay
According to the Bureau of Labor Statistics, the U.S. economy is continuing to add jobs in record numbers, which creates more openings than there are workers to fill them. That’s good news for workers because it forces companies to woo new employees with better wages and benefits.
Like a free college degree.
Disney, Starbucks and Walmart have all rolled out education programs that will pay for employees’ degrees — even part-time employees’.
There are some limitations and fine print, to be sure. But we repeat: Free. College. Degree.
Molly Moorhead is a senior editor at The Penny Hoarder.