10 Tips for Paying for College and Avoiding Excessive Debt

Every year there are over 21 million people making college student loan decisions that will affect their financial future for years. These borrowers are often overlooked but will be a significant part of the student debt crisis as it grows. Here is a list of 10 tips for paying for college and avoiding excessive student debt.

As a student progresses through college, engaging them in a conversation about the financial outcome can be awkward. The colleges only provide financial information one year at a time. Topics that most families don’t take into consideration are the added cost when their student transfers or changes their major. The increased cost for many students will result in more debt. These decisions have financial consequences that are not very transparent and can often come as a surprise to the student once they graduate.

Due to the lack of transparency, high emotions and the easy ability to defer loan payment, families are unable to project the financial consequences of these important decisions. Both students and parents need to engage in better college financial conversations which will result in better outcomes and lower student loans.

Listed below are our tips:

1. Understand your College Credits

A college student is considered a full-time student at 12 credits. The problem is in most cases, a student will not be able to graduate within four years if they only take 12 credits per semester. If you consider that 35% of students will transfer and over 50% will change majors, understating the number of credits needed to graduate is critical. This seems like a simple concept but in many cases, most students do not properly plan their credit hours. The best way to save money is to graduate on time.

2. Timing of Courses

Many colleges design their curriculum to fit the majority of the students as they progress to graduation. As a result, some courses are only offered during certain semesters. In addition to tracking the total credits, students need to map the required courses for their major and when each course is offered. This course mapping should be done at the end of each semester and during registration.

3. College Credit Tuition

Students and parents need to understand their tuition bill. For many colleges, you pay as a full-time student. The number of credits that a student can enroll could vary from 12 – 18 credit per semester. As more students transfer and change major, using the total credits allowed may allow a student to take an additional course without added cost. Depending on the schools, policy this could be a great way to save money and graduate on time.

4. Annual Federal Loan Limits

Proper debt structure is often overlooked in planning for college. This is due to the complexity, traditional debt planning and lack of proper information. We always recommended that a student take the Federal Direct Stafford Loan each year while an undergraduate. This will improve the student’s loan repayment and forgiveness options after graduation. The annual limit will be adjusted based on the student’s academic progress and if they are a full time or part-time student.

5. Incurred and Projected Debt

Earlier I discussed the importance of tracking a student credits to make sure they are on the path to graduate on their targeted date. More colleges and even some states are requiring colleges to send letters each year to the students stating the amount of current federal debt that they have incurred. This is an improvement but is only one part of the solution.

Students and parents need to have both incurred and projected debt to graduation. To make the best college financial decisions, families need to know the “WHAT” they will pay and the “HOW” they will pay it. The “HOW” is custom to each family and determines the debt structure.

The Pay For ED, In-College Payer software helps both students and parents project their debt to graduation. It builds a personal budget using the projected income and loan repayment options. This enables the family to envision both the “WHAT” and “HOW” in their specific situation. As a result, they can make informed college financial decisions and avoid excessive student debt.

6. Understanding of Loan Repayment Options

A student’s debt structure drives their loan repayment options. The Federal Student Loans have better loan repayment and loan forgiveness options than private loans. There are currently 9 federal loan options depending on the type and date of the loan. Only certain loan repayment options qualify for loan forgiveness.

There are more advertisements regarding private student loan consolidation. If the borrower converts their federal loans to a private consolidation, they no longer have access to the federal repayment and forgiveness options for those loans.

7. Career Income and Demand

Following your dream is an important part of the college experience and college major decision. As part of that decision, the student needs to investigate the demand of that career and income potential. There needs to be a sense of reality in chasing a career dream. Many students have the impression that attaining a college degree is a guarantee of a secure financial future. That is not always true.

While making these college student loan decisions, many students are not envisioning their career income and whether it will support the debt payment after graduation. This is one of the major weaknesses of the college financial decision process. The Pay For ED, In-College Payer has a built-in personal budget calculator which allows the student to input projected income, personal living expenses and select a customized loan repayment option.

8. Tax Strategies

Often overlooked in the planning for paying for college are a variety of tax strategies or advantages. As an example, the American Opportunity Credit is worth up to $2,500 per year per student. This is limited to undergraduate students and can only be used for 4 years. There are also tax harvesting and business owner advantages that can be utilized. Some advanced planning is required to take advantages of these advanced strategies.

9. Using summer courses

A great way to save money is to take summer courses. Students can get ahead or use summer courses to get back on track if they are behind in credits due to a transfer or major change. Summer courses can also help to minimize debt. The student should always check with the current college and get approval before enrolling in any summer courses. Each college is different and may have specific guidelines for course approval.

If you use the summer courses and optimize the semester credits limit, families could minimize their cost. By reducing a family’s cost, less debt will be needed to achieve the desired outcome.

10. Planning for Post Graduate

Over the past few years, more careers are requiring additional education to achieve the desired career. Planning for this additional cost and debt needs to be done as soon as possible in the college decision process. In my current presentations, I discuss how student and parents need to envision your child’s life at age 25. This would include education requirements, income, and student debt.

I often hear students and parents wishing they had made different decisions. Using all the assets for an undergraduate degree may not be the best decision. Graduate loans have much higher interest rates and fees. Undergraduate decisions and student loan planning could improve your child’s financial future if done properly.


The path to a college degree is very different today. Examining the college expenses, projected debt and future income are important parts of the college financial decision process. Managing expectations and lifestyle needs to be added to a student’s plan especially as he or she progresses through college. At the end of the day, graduating on time with manageable debt is a goal that should be reviewed each year.