The cost of education has increased significantly over the last decade, leaving many students with no other option but to take out loans to finance their education. While getting a student loan is a great way to pay for college, it has a huge drawback, which is that it leaves you in debt. According to the College Board, 50% of bachelor’s degree students who graduated in the 2022-2023 academic session left school with an average of $29,300 in education debt.
In this article, I discuss three of the best alternatives to student loans.
Scholarships
Scholarships are the most popular alternative to student loans, and for good reason. There are two types of scholarships — public and private scholarships. Public scholarships are offered by the government, while private scholarships are awarded by organizations, foundations, or individuals.
Scholarship programs typically have specific requirements that you’d have to meet before you can apply. Most scholarships fall under one of the following categories.
- Merit-based — awarded to students based on their academic achievements.
- Need-based — awarded based on a student’s financial status (might include factors like academic performance and extracurricular activities).
- Athletic scholarship — awarded based on a student’s athletic ability.
- Activity-based scholarship — awarded to students who are involved in certain clubs, professions, or extracurricular activities.
- Identity-based scholarship — awarded to students who fall under minority or underrepresented groups.
All scholarship programs are different, and some are more competitive than others. For instance, the Rhodes Scholarship is awarded to just 32 U.S. students yearly. To give yourself a better chance of landing a scholarship, it’s best to apply for as many scholarships as you can. You must also commit to the process because you will only be selected if your submission stands out among the many applications that are sent in.
Grants
Grants are another great alternative to student loans. Like scholarships, grants can either be federal or private. The federal government awards federal grants, while private grants are provided by private organizations, companies, or even individuals.
Federal grants are offered to students with financial needs, while private grants are given to students by private entities as part of their mission or social responsibilities.
Because federal grants are aimed at helping financially vulnerable students, your financial status is what determines your eligibility for a federal grant. Private grants, on the other hand, are set up for a myriad of reasons. It could be to help students of a particular ethnic group or to encourage students with outstanding academic performance. The most common eligibility criteria for private grants include ethnic background, religion, academic achievement, and course of study.
There are various grant opportunities out there; however, as federal grants are more popular, most people do not pay close attention to private grant opportunities. So, do your research and apply for as many grant opportunities as you qualify for.
Note: Like scholarships, grants do not need to be repaid, but certain opportunities might demand a service commitment. For instance, Teach Grant recipients have to teach in an approved school for a minimum of four years.
Employer-Funded Scholarships
Some employers award scholarships to their employees, dependents of employees, or children of deceased/retired employees.
Qualification requirements vary from one organization to the next. Certain factors that are often put into consideration include:
- Job performance
- Academic achievements
- Employee’s financial status
- Length of service with the company
- Course of study
- Educational institution
Certain organizations do not offer outright scholarships. Instead, they provide educational benefits to qualified employees. One such benefit is tuition reimbursement. Unlike scholarship funds, employees are expected to pay their academic fees, and if they meet the reimbursement requirements, the sum is refunded to them.
Check with your organization/guardian’s organization to know if they have such employee benefits, and if they do, thoroughly go through the requirements to determine if you are qualified.
Note: Certain employers may require scholarship beneficiaries to work with the company for a specified period after completing their education. So, be sure to check the scholarship terms before applying.