Alternative ways to pay for college

It’s no secret that the cost of a college education has been steadily increasing every year. In the 2018-19 academic year, the average annual cost of college was estimated to be about $18,400 for public institutions, $47,400 for private, non-profit institutions, and $27,000 for private, for-profit institutions. These figures are inclusive of tuition, fees, and housing.

To fund their education, most students pursue financial aid options including grants, scholarships, and loans. Unfortunately, students often find that they are ineligible for financial aid, or if they receive financial assistance, it doesn’t cover all their expenses. If this sounds familiar, putting aside your college dreams or acquiring a ton of debt aren’t your only options. Pursuing creative ways to help cover your school-related expenses can help to make a huge dent in any debt you’ll owe. Below, we’ll share alternative approaches you can consider.

Alternative sources of funding

There are numerous nontraditional approaches to consider when it comes to funding your college education. Many of these may only work as supplementary funds and may require some extra effort and creativity, but could be well worth your time if they mean the fulfillment of your college dreams.

Family and friends

One avenue many students choose to pursue is to ask family and friends for loans. There are many pros and cons to this method of funding.

On the plus side:

• you don’t have to worry about a low credit score
• the loan is likely to come with little or no interest
• you avoid falling prey to lending scams
• people close to you may be willing to offer flexible repayment terms

Drawbacks to borrowing money from family and friends include:

• owing money to a family member or friend could put a strain on the relationship
• conflict might arise if you can’t pay back as planned
• you lose out on the ability to build a great credit score
• tax laws might be a little tricky

Asking family and friends to loan you money to pay for school is a viable option, but if it goes sour, it could permanently damage your relationship with them. Unexpected things may happen. You may not be able to make timely payments, or your family member or friend may recall the loan early if they find themselves in a financial jam. Due to these risks, it’s best to use this as a last-resort option.

The U.S. military

Students who have parents or other close family members in the military often follow tradition and opt to serve their country. In terms of funding college, students with an interest in the military can find financial assistance from their affiliation. If this is of interest to you, there are several ways you can find help paying for college through military affiliations.

• Enlist in a service branch. Individuals who commit to a specified enlistment will have their schooling 100% paid for while on active duty. If you don’t want to be in the military full time, you can join the reserves or the National Guard. Choose a job you want to pursue, and the military may pay your college costs to train you.
• Join ROTC. In this scenario, you go to college first, receive financial assistance from a U.S. service branch, and have a guaranteed job after college in your chosen branch as a commissioned military officer. You need to commit to a specified amount of time in service, but can be debt-free if you qualify.
• Apply to a military academy. Attending one of the 5 military academies in the U.S. is free. As a cadet, you receive a yearly salary (stipend) and all your expenses are paid for. This is not an easy path. The admission process is rigorous and requires a letter of congressional nomination. However, if you qualify, and have an interest in pursuing a military job after college, it can be a great option.

Another option is if your parent or spouse was a service member and is eligible for GI Bill benefits. There are specific criteria and timelines involved, but if your family member didn’t use or need their GI Bill benefits, they may be able to transfer the credits to you to help pay for schooling.

» Read: Transitioning from military service back to academia

Employer training

Students often find financial assistance from their employers. Up to 92% of employers offer some type of benefit program. They do this because they want to attract top talent by offering competitive benefits. Investing in people also ensures a fully-trained workforce who remain with the company long-term. Skilled employees are a huge asset for an organization.

Many employers offer financial assistance in the form of company-funded degrees and certifications. They may provide full tuition benefits in exchange for a commitment to remain in their employment for a specified amount of time. Others may offer tuition reimbursement, which doesn’t necessarily require a commitment, although the amount offered may vary depending on demand.

Your community and the public

Crowdfunding and peer-to-peer lending have recently gained popularity as alternative sources of funds for aspiring college students. There are also more traditional avenues of fundraising, such as those that can be accessed through your religious community.

Crowdfunding is often used by students who have exhausted their options, are ineligible for grants (e.g., graduate or post-graduate students), or come from low-income households unable to fill the gaps created by inadequate financial aid. The 2 top crowdfunding platforms are GoFundMe and Indiegogo. There are also lesser-known sites such as Feenix, YouCaring, and Fundly.

Overall, $1.5 million is raised every month by students through GoFundMe, and the average campaign raises about $2,000.

Students who struggle to qualify for conventional loans may consider borrowing from investors instead of banks.

Peer-to-peer (P2P) lending is a growing trend. Students who struggle to qualify for conventional loans may consider borrowing from investors instead of banks. To do this, you request money through a marketplace, such as Peerform, LendingClub, or Prosper. Investors, using the same platforms, seek out applicants. Unlike traditional student loans, poor credit or no credit are not barriers to qualifying for a P2P loan.

Another benefit is that you don’t need to accept an offer from the first lender, as is often the case with traditional loans. You typically have the opportunity to shop around. Note, some lenders are prohibited from allowing students to borrow money for college, although they may lend money to students to cover other expenses.

If you’re active in your church, temple, or religious school, this affiliation may provide you with another option to access financial aid, such as loans or scholarships awarded to students who meet specific criteria.

Getting creative

Creative students may also have the option of investing their time in side hustles. With the gig economy continuously expanding, the opportunities are numerous. You can become an internet influencer or start a side business from home selling your products or services online. For instance, if you’re skilled in coding, you can develop and sell apps, or market yourself to build customized apps for companies.

Part-time jobs are another way to earn money to help pay for school. Common jobs include fast food franchises, some of which offer employees scholarships or tuition reimbursement plans, on-campus jobs, freelance work, childcare services, restaurants, and retail. Unlike work-study aid, where you’re limited in terms of where or how much you can work, the options for part-time work in traditional settings are almost limitless.

Other strategies

Some students opt to attend tuition-free colleges, found in 20 U.S. states. While it is true that these colleges offer free tuition, they are not completely cost free. You still pay for other expenses, such as fees, housing, and textbooks. Typically, you need to meet residency, post-graduate, or other requirements to receive the free tuition. Always read the fine print and consider all the pros and cons, because attending a tuition-free school may limit your academic options.

Some schools offer different types of tuition waivers. Contact your school business office to ask about discounts for military, legacy status, or academic excellence. Other money can come in the form of tax credits. The American Opportunity Tax Credit helps offset the costs of your first 4 years of college by allowing up to $2,500 credit per student per year if you meet the criteria specified by the IRS.

Always read the fine print and consider all the pros and cons, because attending a tuition-free school may limit your academic options.

Testing out of classes is another option to help bring down expenses. In this instance, you take fewer classes at college and receive credit for other things you’ve achieved. Advanced Placement (AP) classes in high school, life credit, and military service credit are just a few examples. Passing a College Level Examination Program (CLEP) test in subjects you excel in might be another excellent option.

CLEP testing allows students to earn college credits through low-cost standardized testing, available at more than 1,700 sites in the U.S. Most CLEP tests cost $89 and require a score of 50 or 60 out of a possible 80 to quality for college credits.

Keep in mind, while all these options may save money, they also may limit your choice of colleges or degrees because testing out isn’t universally accepted across all schools.

Internships and research positions are great opportunities. Benefits include getting experience in your chosen field and getting paid for your work. The primary drawback is that they can be hard to find and competitive to land. Start the application process early, get strong letters of recommendation, write a quality personal statement, and be sure to check the prerequisites for internship or research positions.

To receive AP credits, students need to pass a test with a score high enough that a college will accept it as credit.

Concurrent or dual enrollment can bring down the cost of college and enable you to graduate early. Students typically enroll for dual-enrollment courses in high school to earn college credit. Many people confuse this with AP courses, but it’s not the same. To receive AP credits, students need to pass a test with a score high enough that a college will accept it as credit. With concurrent enrollment, students may find that they have a number of options, although this depends of what is available in their school district. These options can include:

• students traveling to the college campus and taking courses
• college faculty coming to the high school or secondary career center
• students participating in online classes taught by a college instructor

If the student successfully passes the college courses, the college retroactively assigns credit for high school coursework upon matriculation. Student performance is issued via a transcript.

College costs can seem prohibitive, but being proactive and pursuing several different avenues of funding helps to significantly decrease the costs associated with higher education. The above options for funding school should really be secondary or even last-ditch efforts. While these options can definitely be beneficial, they may disrupt you work-life balance due to the time and energy they require. The recommended place to start looking for financial aid is to complete the FAFSA form, and to pursue scholarships and grants that you may be eligible for. Yet, for students who do not have these options, there are options out there to help you get through your studies.