8 ways to pay for college without loans

Ashwin Honawar

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ways to pay for college without loans

There’s a very famous quote by the American billionaire and investor, Warren Buffett; He famously says: “Do not save what is left after spending, but spend what is left after saving.”

While financing a university or college education, this principle becomes extremely important.

Because the key here is to avoid the burden of debt while investing in the invaluable asset of education. For most Americans who are planning on higher education at a college or university of choice, this might sound difficult or even impossible. “How can this be achieved in practical terms?”, you might ask.

Understandably, taking college loans is good enough. It opens up doors to higher education and allows you to pursue that dream degree that could open up portals for an excellent career and help you live an amazing life. A student loan can unlock doors to any of the best universities in the US that are prestigious and renowned for their education and degrees.

As a student, it means you’ve some very tough choices to make on how to fund your higher, college and university education, without a student loan.

Let’s understand the value of education in terms of investment, as Warren Buffett would.

Understanding the Value of Education

Education is perhaps the best and supreme investment any parent, family, community or even you can make in yourself. As I said earlier, a superb education and a degree from a top-notch college can give you the life you’ve always wanted and secure your future too.

At the same time, it's important to make sure that this investment in your education doesn't outweigh its potential returns. This means you have the huge task of choosing a college and a course of study wisely.

Usually, every student chooses a course of study in a field they love and cherish and try get admission to the best university in that field. On the other hand, you also have that unpleasant task of finding money to pay for such higher education, if you wish to avoid a student loan.

Before proceeding, I will add that a student loan or education loan has both its pros and cons.

Facts & Figures of Student Loans

By the first quarter of 2023, student loans in the US stood at a dizzying mark of $1.77 trillion. In fact, several countries such as the Netherlands, Turkey, Switzerland, Poland, Argentina, Sweden, Norway and Belgium, to name a few, have an annual Gross Domestic Product (GDP) that’s much smaller in value than that of student loans in the USA.

About 92 per cent of the $1.77 trillion in Federal Student Loan, meaning the money came from the US government to fund education while the remaining eight per cent comes from external lenders such as banks, credit unions and other financial institutions. Just for your information: More than 43.4 million American students have taken the Federal Student Loan, according to various reliable sources.

In 2023, the average federal student loan debt is $37,338 per student. Private student loan debt averages $54,921 per student, according to a report in the newspaper, USA Today.

8 Ways to Pay for College Without Loan

These figures are enough to scare you or anyone who wants or plans to take a student loan from the Federal authorities or private lenders. That’s because taking a loan comes with a commitment to repay. In every case, student loans come with hefty interest rates too.

However, don’t worry. Here are some top and best ways to pay for college without loans.  You can try any of these according to your needs. All these ways are time-tested, proven and legit. Hence, you can use them safely while getting that dream degree from your college or university of choice.

1. Scholarships and Grants

Scholarships and grants are the first option. That’s because they offer great value without cost. Try every avenue to find scholarships, including local businesses, community organizations, and national competitions.

This will require extensive research and efforts to send in scholarship and grant applications. However, the effort might prove worthwhile, when you land a scholarship or grant.

2. Open Own Business

open own business

Consider starting a small business or a side hustle. For example, side gigs such as tutoring, freelance writing, or a tech start-up can help you make enough money to fund a college education. I would suggest that you find something that aligns with your skills and has growth potential.

Such businesses are in high demand and you shouldn’t usually face problems getting customers. There are several businesses such as dropshipping where you don’t really have to work hard. Once you set it up, the business runs on its own steam, provided it’s configured correctly.

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3. Leverage Savings & Interest

savings and interest

Start saving early. You can save a considerable amount of money by starting early. Stash the money in a bank account or with some credit union, and you will benefit from the compound interest. Even small amounts saved from part-time jobs or other income sources can grow significantly over time.

Don’t throw away pennies and coins, like majority of Americans. Instead, save them in boxes and cans till they add up to a considerable amount. You can deposit their coins in your savings account and benefit from compounding interest.

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4. Invest Where Possible

Invest Where Possible

Check details and invest on Roth IRAs or low-cost index funds. You can also begin investing small amounts on stocks, Mutual Funds, ETFs, REITs and other assets through various apps.

With these apps, you can start investing with as low as $5 and also get bonuses such as cashbacks and free stock. Cryptocurrencies are also an ideal form of making money grow to pay for your college education.

5. Earning While Learning

Earning While Learning

Work-study programs and part-time jobs, especially those related to your field of study, can provide income and valuable experience. This is similar to reinvesting dividends from stocks – you're reinvesting in your own human capital.

6. Live within Means

Live within Means

Most young people love to splurge money. Instead, you could use the same money to pay for your college education. Therefore, create a lifestyle that prioritizes saving over spending. This doesn't mean living without comforts or essential things. 

Instead, it means understanding the difference between necessary and avoidable expenses and spending only when necessary. Prudent spending helps save a lot of money.

Also Read: 10 Things That You Are Wasting Money On & How to Stop Them

7. Community College and Transfer Credits

Community College and Transfer Credits

Starting at a community college and then transferring to a four-year institution could help you to study for your dream course without taking a student loan.  

This can take a little longer due to various processes that are part of this chain. However, a few months difference in joining college doesn’t really affect your life negatively while you get to study at a college without taking a loan.

8. Negotiating Fees

Don't hesitate to negotiate tuition or seek less expensive educational options. Most colleges and universities in the US are in a position to offer cheaper options for the course of your choice.

But you can get these only when you ask and negotiate with the education counselor or any other official at the educational institute. This can help slice of lots of dollars off your college education costs and help complete the degree without taking student loans.

Alternative Ways to Learn

The traditional college might sometimes not serve your purpose of higher education. This could occur because a specific course isn’t available or is priced too much to afford.

In such cases, you can always check vocational schools, online courses, and self-directed learning. In many cases, they can offer a better option, depending on your career goals.

The Long-Term Perspective

Always keep a long-term perspective. Avoiding student loans means you're not just avoiding debt; you're setting yourself up for financial freedom and flexibility after graduation.

Financing a college education without loans requires a blend of prudent spending, smart investing, and a keen eye for opportunities. It's about recognizing the long-term value of education and making the right decisions to maximize benefits without the burden of debt.

The Burden of Student Debt

Debt can be a useful tool, but it's like a double-edged sword. It must be handled with care. Education loans, while providing immediate access to education, can become a long-term financial burden. The interest on these loans often compounds, making the total amount paid significantly higher than the principal borrowed.

When it comes to education loans, this principle becomes critically important. In an era where student debt is ballooning, understanding the hazards of taking on education loans is essential for financial well-being.

Reverse Compounding Interest

Just as compound interest can work for savings and benefits you, it can have the opposite effect on a student loan. The longer you take to repay, the more you end up paying.

This is same to the negative compounding effect, and it can create major hurdles in your financial growth for years. Studies reveal that students that leave college with large loans usually suffer a seven-year setback in their life.

Delayed Financial Milestones

Carrying significant student debt can delay major life milestones. It might mean waiting longer to buy a house, start a business, or even begin investing.

In investment terms, this is an opportunity cost – the loss of potential gains from investments you couldn't make. It can also delay your marriage and sometimes, make you lose an opportunity to enter own business.

Risk of Default and Credit Implications

Defaulting on student loans can have severe consequences for your credit score. A poor credit score can affect your ability to borrow in the future, much like a bad investment history can affect your ability to invest.

This means, you will face problems getting home mortgage, vehicle finance and personal loans or even an ordinary credit card. In some cases, you may have to pay much higher interest to the lender because of poor credit score.

The Psychological Toll

The stress of carrying debt on your shoulders is usually extreme. Debt burden can lead to low self-esteem, stress, anxiety and even depression.

These can affect your work and personal life too. Such psychological toll needs professional help from a psychiatrist. Treatment can sometimes prove expensive.

Limited Career Choices

Heavy debt can force graduates into making career choices based on salary rather than interest or passion and long term goals for professional growth and life. This happens because persons steeped in student loan are in a hurry to get jobs and clear the debt quickly.

Such graduates will not wait for the right employer offering the right pay. Instead, they lose their power to choose and will grab any job that comes first.

In some cases, they also jump jobs quickly merely because another employer is paying just a little more than the present one. This reflects poor on your CV and Resume and can impede your career growth.

Avoiding Trouble

Not all degrees lead to high-paying jobs. There's a risk that the return on investment (ROI) of the education won't match the cost of the loan.

It's vital to assess the potential ROI before taking on debt. This can be done by finding the scope of the job that you’re likely to get after completing college. Also find out whether the degree and your nature of work will be relevant at least for the next 60 years.

One more important thing to find before taking a course and education loan is the average salaries for fresher to professional.

Check whether such pay scales are in line with your expectations of a life and career. If the pay is lesser, you might end up entering a wrong career and get stuck there lifelong or, might have to spend some money to learn fresh skills and change careers in midlife.

The Changing Landscape of Education

With the rise of online courses, certification programs, and alternative education paths, the traditional four-year college route is not the only option. Sometimes, taking on substantial debt for traditional college education might not be the most financially sound decision.

Therefore, you can also consider online courses offered by some of the topmost universities in the UK, Australia, Canada, India and New Zealand. Often, these work out cheaper than US education and you might get a superb degree that’s valid in the US, from any top universities in these countries.


In today’s world traditional college education has a rival in online education. While there’re several benefits of studying traditionally at a top college or university, we have also to consider the debt burden and its crippling effect on life after graduation.

In conclusion, I will suggest that you consider all options carefully before jumping in debt with college or education or student loan and self-funding of your university studies.

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