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Average College Debt: How It Affects You and How To Pay It Off

Do you know what the average college debt is? Do you have student loans yourself? Not surprisingly, college has only gotten more expensive over the last 20 years. And, more than 50% of college students have to take out loans in order to cover the costs of education. But what does that really look like?

Average College Debt in 2021: A Few Statistics

First, let’s talk about student loans and college debt. There are quite a few statistics to understand before you look at the average college debt as a whole. 

There have also been changes in the last year alone, that have caused an influx in the costs of student loan debt. One major example of this is the the Coronavirus Aid, Relief and Economic Security (CARES) Act that was passed in March 2020.

Related: The Average Credit Card Debt in 2021 (And How to Pay If Off)

Average Student Loan Debt in 2021The Covid Impact on Student Loan Debt

When the Act was passed, federal student loans were set to 0%, and most federal student loan payments were paused (until September 30th, 2021). Of course, borrowers could still pay on their loans if they chose too, but many chose not to or took advantage of paying off other loans, saving money, etc.

As a result, the student loan debt amount has reached a record high of over $1.57 trillion. And, loans in forbearance or deferral are double compared to 2019.

Again, many borrowers took advantage in 2020 and 2021 to pay off other debt (like credit cards or other loans) since federal student loan debt was no longer carrying an interest rate. But, private loans were continuing to accrue interest, and saw a growth as well.

So, if you have student loan debt, you’re not alone. If you think you’ll need to take out loans in order to cover college, you’re also not alone. But, there ARE some things you can do in order to avoid (or at least, limit) having college debt.

How To Avoid College Debt

If you haven’t attended college yet, or haven’t needed loans until recently, you may be looking for ways to avoid student loans altogether. And while it’s not always possible, there are a few ways to at least save you from getting into 6-figure of debt (or more).

Also, keep in mind that if you want to go into an advanced field (like becoming a doctor or lawyer), these tips may not be the best. That’s another topic for another day!

1) Go To A Community College First

Of course, one of the best savings tips is by not going into a 4-year college right away. Instead, get your general education requirements out of the way at a community college. Then, you can either transfer your credits, or at the very least, get your associates while you decide how you want to tackle your bachelors.

Community colleges are extremely affordable, and can save you a lot of money over the course of two years. I got my associates at my community college, and only spent $9,000 total.

I was then able to transfer my credits to a 4-year college.

Had I gone to a state college, even as an in-state student, I would have spent around $22,000. That’s a huge savings!

Related: 14 Steps to Get a Serious Head Start in Life

debt free college degree2) Choose A State College vs. Private College

Again, unless you have specific aspirations or need to go to a private college for your resume/job search, you really don’t need to go to a private college.

I understand some families like to go to the same college, and having a prestigious degree may seem appealing. But do you want to know what’s not appealing? Graduating and having to pay back exorbitant student loans, even if you can’t find a job right away.

Instead, attend an in-state college and save your money. Bonus points if you can stay at home or live cheaply while you get your degree.

3) Try Online College

Online colleges have come a long way, and many are now accredited both regionally and nationally. If you want to work while getting your degree (to support yourself or to avoid loans) an online college could be a great option. One of the most popular online colleges as of right now is WGU, and they have a set rate for their 6-month terms.

Related: The Best Online Colleges and Online Universities of 2021

4) Test Out Of Classes

Did you know that many colleges allow you test out of taking the required courses? Of course, this will be dependent on your program and the college you attend, but usually, this is a great way to at least pay less for general education classes.

One of the most popular options that is backed by many colleges are CLEP exams. If you decide to go this route, you will need to be proficient in the area you’re testing in. The exams do require a certain percentage to be considered passing. But, this route can also save you hundreds of dollars.

Many of the exams are under $200, and count for 3 college credits.

5) Fill Out Your FAFSA

If you’re considered lower income (or even middle class), I highly encourage you to fill out the Free Application for Federal Student Aid (FAFSA). If you qualify, the FAFSA grants could cover part (if not all) of your costs each semester of college.

A quick note about the FAFSA is that you only have a certain amount of time to use it. If you qualify, it’s only for 6 years (or 12 semesters) of grants. So, if you take longer than that to get your degree, you’ll need to look at other options like paying out of pocket, scholarships, or loans.

Berry College, Rome Georgia6) Apply For Scholarships

Did you know that over $6 billion dollars of scholarships is awarded each year? That’s a lot of money! And, you may qualify for more than you think.

There are many ways to research and apply for scholarships, but don’t completely discount it. It may take time to apply and be approved, but every little bit counts.

7) Take Your Time

Contrary to popular belief, you don’t have to finish your degree in four years. It actually took me 9 years (on and off), and guess what? I still have a degree.

And best of all, I didn’t have to get into student loan debt to get it. Don’t worry about anyone else’s college timeline but your own. If it takes you longer to finish school because you want to avoid student loans, so be it.

What If You’ve Already Taken Out Loans?

Now, what do you do if you’ve taken out student loans, but want to pay them off? There’s hope.

1) Focus On High Interest Loans

If you have a mixture of federal and private loans, list them all out with what you owe and the interest rate. Focus on paying off the highest interest rate one first (unless there are super small loans that you can pay off quickly). That way, you’re saving more money in the long run.

(Note: Derek actually prefers the debt snowball. Follow the link to learn more.)

2) Make Sure Extra Payments Go To Principal

Even if you’re paying extra money each month to your student loans, you may just be paying towards next month’s payment. Instead, call your loan provider and make sure they put the extra to your principal amount. That way you can lower what you owe, save on interest, and pay off your loan faster.

underemployed - with help of mentor3) See If Your Employer Will Pay For Them

While there are some possible cons to employers paying for school and loans, there may be some benefits as well. It’s always worth a shot to see if your employer will pay for some of your school loans, or any benefits that could help you pay them off faster.

4) Refinance If You Can

If you have a lot of different loans and interest rates, it may be worth it to look into refinancing your student loans. I would only recommend this if your credit score is decent, and if you can save money in the long run. Don’t be afraid to crunch the numbers before refinancing.

Our Recent Affiliate Partner to Help You! — SoFi: Student Loan Refinancing

Average College Debt: The Bottom Line

The average college debt is growing. And while I don’t fault the individual borrowers (for many reasons), I’ve learned that knowing all of your options can save you a lot of headache and money owed. These tips can help you from joining the statistic rankings and avoid debt and high interest rates.

Are you above or below the average college debt amount of $36,000? Are you ready to pay it off?

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AUTHOR Kimberly Studdard

Kim Studdard is a project manager for online entrepreneurs and small businesses. When she isn't spending time with her daughter and husband, or reading her growing pile of horror books, you'll find her working on her HR degree and working towards FIRE.

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