Funding College Without Going into Debt Part 1: Finding Scholarships

student in library

The cost of college continues to skyrocket, yet a college degree is required for many professional roles today. Moreover, average college student and their families can’t meet college costs with earnings or savings. So to finance college, students often take out loans and use credit cards, ending up with high post-graduation debt. To get the best return on your college investment, you need to avoid debt and in this two-part article, we tell you how.

Student Debt Can Lower the ROI on Your College Education

Outstanding student loan debt, including both federal and private student loans, currently totals almost $1.3 trillion. And the average student loan debt for the class of 2014 was $33,000, according to Mark Kantrowitz, publisher at Edvisors. In fact, student loan debt surpassed credit card debt in 2010. Yet, if you’re like most students, you’ll find that credit card debt is still excessive at graduation. In 2013, graduating students averaged $3,000 in credit card debt on top of their student loan debt.

College debt actually reduces the return on investment (ROI) on your college education. Why? Because, while a college education used to guarantee a higher standard of living, these days college debt is crippling college graduates’ ability to fully participate in the economy. You may find most of your after-tax income going to repaying student debt. You may have to delay buying a home or a car, starting savings, furthering your education, or even getting married. These effects are increasingly long-term, with many people still paying student loan debt well into their middle years and even into retirement.

Thus, it’s become critical for students to find alternatives to student debt. Scholarships and grants represent a strong alternative because they are money that doesn’t have to be repaid.

Why Should I Get a Scholarship?

While the answer should be obvious—you don’t have to pay them back—millions in scholarship dollars still go unclaimed annually. That’s because students don’t know about them or don’t know how to apply for them.

But stories abound about students winning the entire cost of college tuition and expenses in scholarships and grants. One of those stories is about Cameron Thomas, who funded his entire education, undergraduate and graduate, without student debt by getting $500,000 in scholarships. His mother, Gwen Thomas, has even written a “how to” book entitled “The Parent’s Smart Guide to Sending Your Kids to College Without Going Broke!”

He’s not the only one. Student loan expert Reyna Gobel says, “I've seen families not have to use college savings and avoid borrowing student loans because of scholarships."

Gobel, the author of “CliffsNotes Graduation Debt: How to Manage Student Loans and Live Your Life” and chief editor of, further suggests, “Kids should enter essay contests as early as elementary school and start scholarship game plans together with high school counselors beginning just before their first year of high school.” What seems impossible to some becomes likely if you plan properly and know what to do.

Credit card expert Beverly Harzog agrees. She calls credit cards “toxic debt,” and while she says “student loans are an investment in your future,” she believes that debt should be avoided whenever possible. Harzog, whose latest book is "The Debt Escape Plan: How to Free Yourself From Credit Card Balances, Boost Your Credit Score, and Live Debt-Free, urges caution before financing college costs with credit cards.“ Before you put college expenses on a credit card, explore scholarship options first. You really don't want to graduate and start off your new life with both student loan debt and credit card debt.”

Not only can you end up with excessive student loan debt that takes most people years to pay off, you can also set yourself up for long-term financial hardship. Simply put, scholarships have a more positive effect on your overall credit and financial picture than student debt.

Finding Scholarships and Grants

The first thing to do is apply for financial aid through the federal Free Application for Student Aid, or FAFSA, system. That’s because many school-based scholarships and grants (whether from your school or a state or federal government agency like Pell) come as part of your overall financial aid package. They are based on a number of criteria, including income, age, merit, background and geography.

Brady Norvall, founder and chief education officer of FindaBetterU, an adolescent mentoring company for teens that focuses on positive support for them, suggests that students start identifying scholarships early. But he adds, “Don’t just focus on the big name scholarships that are hard to get for most students. Look within your own community and to smaller, less competitive scholarships.” Most such scholarships come from local civic organizations, churches, businesses and community agencies, he says. And those are the places where Thomas and her son got many of theirs.

Finally, Kantrowitz says, “You can win scholarships even after you’ve already enrolled in college, not just in high school and the earlier grades.” Thomas provides strategies in her book for doing just that.

What Do You Do Next?

Once you identify some scholarships, what do you do next? How do you secure them? In Part 2, we’ll tell you exactly what the experts say about getting scholarships to cover college costs so you don’t have to take on so much—or any—student debt.

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