Alternatives to student oans


Alternatives to student loans

Reduce higher education costs

by LSS Financial Services

Nearly one in five Americans (45 million people) carry student loan debt totaling $1.76 trillion, according to 2022 data from the U.S. Department of Education.

The growing cost of tuition and college living expenses can increase pressure to take out even more student loans and raise the total amount of debt people carry.

This can make it difficult for individuals and families to achieve and maintain financial wellness, create sustainable budgets, and save for emergencies.

Here are some financial aid alternatives to student loans that don’t need to be paid back, along with other ways to reduce higher education costs.


Scholarships can be based on academic merit, give more opportunities to people who might have barriers to affording higher education, and/or support students going into particular fields of study or professions.

Think strategically about potential scholarships. Consider academic and career interests and the abilities necessary to excel in those areas. Speak to high school guidance counselors, coaches, and teachers about possible scholarships for students pursuing these interests.

Make a list of potential colleges, and research scholarships available from each of those institutions. Rank them in order of “probable” (scholarships likely), “possible” (scholarships possible), and “reach” (scholarships unlikely). Apply for the scholarships to see if you receive them, and give priority in your final decisions to those institutions willing to give you scholarships.

Eligible Minnesota residents can apply for a new scholarship program that begins in fall 2024: the North Star Promise Scholarship. This scholarship is for individuals from households earning annual income less than $80,000 and who will be attending eligible Minnesota public higher education institutions or Tribal Colleges. The scholarship covers the balance of tuition and fees subtracting all other sources of gift aid.


Grants are typically awarded based on financial need. One example is the federal Pell Grant, which is available for low-income students. Grants are also available at the state level or through specific higher education institutions.

To be eligible for most grants, students must submit the Free Application for Federal Student Aid (FAFSA®) form. I recommend filling it out as early as you can to increase your chances of receiving any grants you apply for.

You can submit the form as early as October 1 before the year that you enroll. Unfortunately, filling out the FAFSA® form can be confusing — especially when one has divorced or separated parents, but Federal Student Aid offers general support and guidance as well as guidance for people whose parents are divorced or separated.

Work study

Work study pays students for working on campus. It is determined by financial need and requires students to fill out the FAFSA® form. Work study is a great way to have a variety of jobs at your disposal that may work well with your study and work life balance, such as being a tutor, tour guide, library assistant or cafeteria worker.


Stipends are funds that are given in lieu of wages for volunteer or other normally unpaid work to help pay for tuition, fees or living expenses. They often come with full-ride scholarships or from special apprenticeships, summer programs or volunteer programs. Two examples of volunteer programs that offer stipends to be used toward higher education are the Peace Corps and AmeriCorps.

Tuition reimbursement

Tuition reimbursement might be offered by your employer. First, check with your human resources department to see if they offer it. If so, see if only you can use it or if it can also be applied toward a family member. Your employer’s program might be available only for particular courses of study and qualifying institutions.

Tuition waivers

Colleges or universities might offer tuition waivers, in which they waive part or all of a student’s tuition charges. Specific colleges might offer tuition waivers for active military or veterans, adopted or foster children, culturally diverse students, graduate teaching assistants, low-income students, nontraditional students, out-of-state residents, study abroad programs, or employees of the college or university, among others.

Other ways to reduce higher education costs

Save what you can before you start school

If you know that higher education is a possibility, set aside money for that purpose as early as you can (without neglecting other priorities like creating an emergency savings fund and managing debt). A 529 account is one higher education savings tool. It is an investment option created specifically for future education expenses, including college. Learn more by visiting the U.S. Department of Education’s FAQ webpage and scrolling to the Federal Student Aid section.

Think about delaying your start date

Not everyone is ready to attend a post-secondary institution right out of high school. It’s okay to spend a year or two in the workforce. It can be a great option if you or your child needs time to decide their education and career plans. It is also a great way to help set aside money for school.  Working and saving first can enhance the higher education experience. Students can see how school can help enhance what they are good at and how their training will apply to the world of work. They can also strategically take courses that are more aligned with their academic and career goals.

Consider a less expensive school to start

The cost of higher education tuition is cheapest at public, two-year institutions, then goes up in price in this order: in-state four-year public colleges, out-of-state public colleges and private colleges. (Private colleges, however, might have more endowments for scholarships and grants than other schools, which could ultimately reduce the cost.) If you or your child is attending college and still deciding what academic or career path to pursue, it might be wise to first take courses at a more affordable community college, then transfer those credits to a four-year institution to finish the degree.

Reduce your future student loan burden if you do have to borrow money

If you need to take out student loans, opt for federal loans rather than private. Federal loans have options and consumer protections that private ones don’t. They include:

  • Up to three years in deferment of payments and loan forbearance if you experience economic hardship.
  • No interest accrual while in school.
  • A six-month grace period after leaving school before payments begin.
  • A wide range of repayment plans that might be more affordable for your budget, including plans based on your income, like the new Saving on a Valuable Education Plan (SAVE).
  • Student loan forgiveness programs such as Public Service Loan ForgivenessTeacher Loan Forgiveness, and other options available under the Loan Forgiveness menu at
  • A period of 270 days after a borrower is delinquent on loan payments before the loan goes into default.

Cut back on the amount you do borrow by taking these steps:

  1. Estimate future income for the occupation(s) you are pursuing. Use the Occupational Outlook Handbook to find data on the median pay in those jobs.
  2. Project what future loan repayment amounts might be if you are employed in one of the occupations. Get started by using the Federal Student Aid Loan Simulator tool.
  3. Build a budget that includes your expenses for a year, and calculate a monthly total from that. (For example: the monthly total will include: expenses that are paid each month, like rent; bills paid once a year divided by 12; bills paid semi-annually divided by six; and quarterly bills divided by three.)

Contact us for support

At LSS Financial Counseling, our certified financial counselors can work with you on a plan to pay for higher education costs. We offer advice and resources for budgetingdebt management and student loan debt. Call our scheduling line at 888.577.2227 to setup a free, confidential appointment. North Star Credit Union partners with LSS Financial Counseling to provide six free counseling sessions for members,

Author Sarah Jannusch is a certified financial counselor with LSS Financial Counseling.

Join Today!








(218) 666-5940

Skip to content