How to Graduate with Less Student Loans

Last updated on - June 1, 2023

How to Graduate with Less Student Loans

The idea of graduating college with less student loans feels like an oxymoron. How do you graduate with less student loans when the cost of a Bachelor's degree continues to outpace inflation? However, you can reduce your overall out of pocket costs if you plan carefully.[p;

Taking out loans to fund your education can be a good investment. And most experts agree that taking out student loans can be a good investment towards your education and future.

However, too much student loans can pose a serious threat to your future success. The fact is, most undergraduate students will take out a loan to fund part of their college education. In 2015-16, 62% of students who graduated with an undergraduate degree had received at least one loan, according to the National Center for Education Statistics.

Taking out student loans to fund your college education doesn't have to spell trouble. To keep from falling victim to the student loan trap, here are five things parents and students should keep in mind:

Have A Frank Conversation with Your Child

The road to graduating with less student loans begins with communication between parents and child well before college. It's almost as important as "the talk" we give our kids when they become teenagers. Parents should discuss with their child, preferably before high school, how they plan to cover college costs and how much they can afford to contribute.

Most parents, even those who have saved for college, are unable to cover 100% of college costs. Having this talk is important to helping your child determine, long before senior year, how they can position themselves for scholarships to reduce college costs. This might also affect the types of schools your student decide to target. If finance is an issue, then you may want to target very generous colleges.

Having a frank and open discussion up front is better than waiting for your child to fall in love with a school, apply, get accepted and then discuss their budget reality. If you are only willing to fund up to a certain amount each year, let your child know that now. I have known parents who have told their child that they are only willing to contribute up to the amount for in-state tuition so if they want to go to a more expensive college, it’s on them. These parents have given their student the opportunity to work harder on academics or pursue more private scholarships over the years.

Waiting until senior year to discuss how and who will pay could spell trouble for most families. You should not, however, rule out going to college altogether because you think you can't afford college.

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Know Your Costs Before You Go

How much your student needs to borrow for college will vary depending on the colleges he/she targets, your family's financial situation and the generosity of the colleges on their list. Your student may qualify for need-based, merit-based financial aid or both. The few highly selective colleges that do not offer merit-based aid, offer very generous need-based aid.

Generally speaking, students who find themselves in the top quartile of a college applicant pool, can expect to win a decent merit aid package, if not a full ride. However, one of the best ways to get an estimate of your true out-of-pocket college cost before you apply, is to find your Net Price (cost of attendance minus any scholarships or grants you might be eligible to receive).

To find your Net Price, use the Net Price Calculator now available on each colleges website. Another option is to use the average Net Price based on family’s income available on the College Navigator. You can search for colleges by name, major, state, zip code or degree and compare up to four colleges. The results will average net price and net price by income. The College Navigator is also a great place to find information on admissions to determine how your student stacks up against other applicants.

Develop Strategies to Cut Your College Costs

Live at home. Living at home while attending college could easily save you $10,000 to $20,000 per year. While you might be itching to venture out on your own, see if living at home could work. This strategy could leave you with much less student debt than if you go the "live on campus" route. 

Attend an early college high school. Do you know that there are high schools that allow you to earn an associate degree and a high school diploma at he same time? These programs allow you to earn your high school diploma while completing up to two years’ worth of college credits. This strategy could easily cut the cost of your undergraduate education in half.

Apply for scholarships. This must be part of every student’s college plan. Strong academics and substantive involvement in extracurricular activities could pay off in merit aid or admission to highly selective colleges with very generous need-based financial aid. Remember, all of the scholarships do not go to straight A students, but most colleges are in pursuit of students who can improve their rankings on US News. There are hundreds of outside scholarships that target different segment of the population – for e.g., Asian American, African American, women, first-generation, low-income.

Start at a two-year college. This options could cut your college costs in half. You could  knock out your first two years of college and then transfer to a four-year university to complete your degree. If you feel you are not academically ready for a four-year college, take a look at the junior college in your town.

Don't rule out a 4-year college until you have done your research though. Some 4-year colleges charge zero tuition if your family income is under a certain amount.

>>RELATED POST: Where to find free money grants and scholarships

Pursuing private scholarships is another way to reduce costs. There are many scholarships available to students as early as the 9th grade, so don’t wait until your senior year to apply for them. And, to increase your chances of winning, don’t overlook the local scholarships that tend to have a smaller pool of applicants. You may also want to try for some the big national scholarships like Dell, Coca Cola and Cooke Foundation.

Don’t Get Caught Up in the Brand Name Craze

Some students become so enamored with the few dozen brand name colleges the media loves to promote, that they sometimes take on an unreasonable amount of student debt.

US News and World Report and Princeton Review rankings are a good way to begin researching colleges. However, while the top 50 colleges may offer some distinct advantages to attending (name recognition by employers; access to professional networks, etc.), there are dozens of other colleges that also provide students with a top-notch education and access to great job opportunities.

In an article published by, Dr. Bridget Terry Long acknowledges that “debt is a reality of higher education today, and some debt is fine if it makes possible a beneficial educational investment. However, the level of student debt that is reasonable depends greatly on the school attended and major.” For example, taking out $50,000 in student loans might be a good investment for an engineer major, but not so much for an art major.

A 2016 study conducted by Nerd Wallet found that “48% of undergrad borrowers said they could have borrowed less and still have afforded their educations” while “31% of students regretted not applying for any or more scholarships.”

Don’t be so eager to chase after a brand name college that you lose perspective of the cost and over-estimate the value of the education. There are colleges that might not make the US News top 50 list, but they can offer you a top-notch education and student experience at a great value. For example, you can find colleges that are committed to supporting and graduating its students with $30,000 or less student debt through the The Coalition Application. Each of the 150 colleges that are members have six-year graduation rate of at least 60%.

Consider How Much You Will Earn After College

How much you are likely to make after graduating college should affect the amount in student loans you choose to borrow. The rule of thumb is that your total student debt should not exceed what you might expect to earn in the first year after graduating college.

  1. To find your potential earnings or the average salary for thousands of professions, visit the Bureau of Labor Statistics’ Occupational Outlook Handbook. You can find salary data, qualifications required and the overall outlook for the job -- how much that field is expected to grow in the next ten years. You could also check Glassdoor to get a more accurate average salary for the job you will be pursuing in your zip code. Remember, you will pay taxes and other deductions, so your take home pay will be lower.
  2. Using a Loan Calculator (like the one on, you can enter the loan amount, interest rate and loan term in years to get your estimated monthly payment.

Final Thoughts

Going to college is definitely worth it and, in most cases, so is borrowing to achieve that goal. Although graduating debt free is not attainable for everyone, graduating with less student loans can be. Just because someone offers to lend you money to buy a Lamborghini, doesn’t mean you should take it especially if all you can afford is a very reliable Volvo. Borrow wisely!

Let us know how if you plan to take out student loans. Leave a comment.

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