6 ways to reduce student debt (before you have it)

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6 ways to reduce student debt (before you have it)

If you’re a parent of a high schooler, you’re probably already worried about your child graduating from college with a mountain of student loan debt.

That’s not surprising as average tuition at a private four-year college is $42,224, according to The College Board. Students attending private schools aren’t the only ones who will be paying off debt for years to come. About seven in 10 students who graduated from public and nonprofit colleges in 2014 had accumulated student loan debt averaging $28,950 per person, according to the Institute for College Access & Success.

It seems like the only way for Junior to escape a mountain of debt is to score a big time academic, athletic or other type of merit scholarship. Either that or perhaps you can readily pay for his education in full. At the other end of the spectrum, if you earn less than a certain amount (usually an income figure determined by the particular school), the college may cover 100 percent of tuition costs if Junior is a top-tier student. Barring these options, how can your family avoid paying back loans?

We’ve come up with three conventional and three not-so-obvious ways to help defray or even eliminate student loan debt. Take a look:

3 common ways to reduce student debt

1. Plan to apply for financial aid

But first, take steps to ensure that your child gets the maximum aid package. With some conscientious planning, Junior may not need to take out loans if he gets enough financial aid, scholarships and grants.

2. Attend a less expensive college

Do your research ahead of time and guide Junior toward applying to at least one financial safety school. In other words: A college that you can afford to pay for without the need for student loans. This often means applying to your state university system. Another tip: Junior might want to consider attending an affordable community college for his first two years and transferring to a four-year university after that. Either way, you will reduce his student loan debt immeasurably.

3. Work it out

Whether this means a work-study job on campus, a paying internship or a part-time job, earning money while in college can help simultaneously pay for expenses and tuition. Another option: Look into colleges that offer co-op programs, like Northeastern University in Boston and Drexel University in Philadelphia. Unlike summer internships, co-ops often tout paid jobs during the school year. At Northeastern, students typically work in co-op jobs in their fields of study for three semesters, which can mean graduating in five years instead of four. But 18 months of work experience also means graduating with a strong resume and often a job upon finishing college. It also means Junior may be well on his way to graduating with less debt.

3 lesser-known ways to reduce student debt

1. Get a jump-start

If it’s possible for Junior to take community college classes while still in high school, this is a great way to accumulate college credits at a fraction of the cost of most four-year colleges. Even better, look into dual-enrollment college programs in your state. Massachusetts, for example, offers a dual-enrollment program for public high school students. This gives high schoolers the ability to take classes at a state college and earn both high school and college credits. These courses are subsidized through the commonwealth and in some cases, students can attend for free.

2. Graduate ahead of time

While thinking about a jump-start on college, it’s also a good idea to consider graduating early. To do this, Junior may be able to transfer in AP credits or course credits for classes he takes while in high school or on summer break from college. Either way, if he can manage to graduate in less than four years, this will reduce your tuition bill and perhaps his ultimate debt as well.

3. Waive student health plan costs by attending school in state

Although Junior may want to travel away from home to attend college, you’ll save thousands of dollars a year in health care insurance costs if he stays in state. The long and short of it: Many schools require that you pay for the university’s health care plan unless you live in the state where the college is located and your child is covered under your in-state insurance policy. In most cases, a student can waive a university health plan fee by showing proof of insurance through a state provider. In the case of Northeastern University, waiving this health care fee equates to savings of $2,159 for the upcoming school year or about $8,600 to $10,795 for up to five years of school.