The following blog post comes courtesy of NGPF Fellow, Deborah Kerby, of Tobyhanna Elementary Center in Pocono Pines, PA.

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During my 17 years teaching high school students, I observed that many considered taking out student loans to pay for college to be an expected part of life. Many of their teachers share this expectation.  As an experienced personal finance educator, I believe it is important to show students that they have alternative options to assist them in paying for college than blindly taking on student debt.

Deborah’s Key Takeaways for Educators:

• Students should be encouraged to apply for grants and scholarships before taking on student loan debt.
• There are alternatives to a traditional 2- or 4-year college program.
• Students can save a lot of money on college expenses with some research and initiative.

What should students know about student loans?

1. Students have to be careful not to borrow more than they need to pay for college expenses. Just because a lender provides you with a loan doesn't mean you should take it. Being young, some will spend the money without thinking of the long-term consequences. Make a budget and borrow as little as possible. 
2. Disclosures of student loan terms, interest rates and fees are often overlooked and can be quite confusing to young people. Here's the Master Promissory Note for student loans provided by the government. Good luck with the 17 pages of legalese and loan jargon! 
3. There is a fee deducted from each disbursement. Student loans are generally disbursed twice a year, or once each academic semester. This fee is not, however, deducted from the principal of the loan, so even though borrowers do not get the money, they will pay interest on it.
4. Overzealous college recruiters sometimes accept students who are not prepared for the academic rigor of college, knowing that most who enroll in remedial college courses will not complete their degree program. Recruiters will assist these students in taking out student loans and enroll these students in remedial classes. A large percentage of defaulted student loans are from students who should not have been accepted to college in the first place. Almost half of college dropouts end up defaulting on their student loan debt.

Save money on college expenses.

There are hundreds of things I could list here, but these are the biggest money savers:

1. Fill out the FAFSA. Filling it out as soon as the window opens means you will get a larger pool of money. There is less left in the pot for late filers. According to Fastweb.com, $2.9 billion in Federal grant money went unclaimed in 2013 alone.
2. Apply for scholarships. Many students I have counseled neglected to apply for scholarships when an essay was required. If it takes an hour or two to complete an essay for a $5,000 scholarship, winning that scholarship means earnings of $2,500 per hour! And the essay may be applicable to another scholarship. A $1,000 scholarship went unclaimed in my M.Ed program because no one applied. I also know people that made a profit going to college because they earned so much money in scholarships.

Students can find scholarships to apply for through the financial aid office of their school, and also through:

1. Fastweb.com

2. Sallie Mae

3. BigFuture - The College Board

4. Volunteer organizations, labor unions, and many other types of organizations in this list compiled by Student Loan Hero.

5. Take College Level Examination Program (CLEP) tests. Many colleges will let you CLEP out of most of your general education courses.

6. Get free housing. Many colleges offer free board to students who volunteer to serve as a Resident Advisor.

Go to college for free

1. University of the People offers associate, bachelor and master degree programs. They charge nothing for tuition and a nominal $100 per course if you want college credit.  
2. Uber is now offering free college tuition to drivers and family members. This is limited to courses offered through Arizona State, and drivers must meet certain requirements, but it is free to those who seek it.
3. Get free or reduced tuition at any college. Since 1944, the U.S. Military has covered tuition expenses for active and retired military through the GI Bill. This is true for both full and part-time military.
4. Take a job at the college you want to go to. There are many paid entry-level positions at colleges and universities, and many of these school will offer free tuition to employees.

Other alternatives to loans

1. Many high schools offer courses that will grant college credit if you earn a minimum grade. Some of these are Advanced Placement (AP) courses, but not all. My school used to offer a basic computer course that followed the curriculum of a similar course taught at the local community college. Students who brought their transcript showing a B or better to the college would receive 3 college credits which could then be transferred to any college. Many cyber schools offer courses that will earn students credits at a local community college.
2. Take one class at a time and pay for it out of pocket. Many young people are not ready for college or are unsure of what they want to study. Taking one class at a time while working and saving can be a wonderful experience for students.
3. Explore opportunities at temporary agencies. Many of them offer free training to employees. Training will get you better, higher paying jobs.

Students who still feel the need to take out a student loan should research the options. They can contact local banks and credit unions about a student loan line of credit. This type of debt instrument allows them to borrow only what is needed and start repayments at any time. The loan money is simply transferred from the line of credit to a checking or saving account as needed.  Interest can be fixed or adjustable, but the terms are outlined in a document that you sign before the loan is initiated. Unlike a student loan, there is no large fee deducted from disbursements.

Finally, graduates with loan debt should see if someone else will pay their student loan debt. There are a number of careers and geographic locations where it is common to find employers who will make student loan payments as part of a benefits package offered to new employees. For example, many inner-city schools offer this benefit to teachers willing to work there. Be careful with counting on the Federal Student Loan Forgiveness program as a recent research report found that ONLY 26 borrowers were approved out of 34,000 who applied! 

As educators, it is important to us that our students succeed after they leave our classroom. We want to provide them with the tools and advice they need to be successful in their future. Every student’s situation is different, so they more information we can provide, the better their chance of success.

Further Reading

I came across these over the past year:

• Everything You Need to Know About Student Loan Interest Rates

• Maine will help you pay off your student loans if you move there

• Student Loan Forgiveness Program Rejects 99% Of Applicants

• The Student Debt Problem Is Worse Than We Imagined

• Marriages are crumbling under student loan debt

About the Authors

Laura Matchett

After graduating with an education degree and spending 7 years in an elementary classroom, Laura made the switch to the non-profit world and loves interacting with students, educators and business professionals across the country. She is passionate about all students having access to high quality education and views personal finance education as one way to ‘level the playing field’. When Laura is not locating or creating high quality educational resources, you can find her mountain biking or searching for the best ramen in town!

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