Four Realistic Alternatives to Student Loans

It was just a few months ago that we learned our collective student loan debt was nearing one trillion dollars. That’s a “1” with 12 zeros behind it. As bad as it sounded then, today we learn it is even worse.

According to a Wall Street Journal article, student loan debt has actually already surpassed the one trillion dollar mark. Is it any wonder this economic recovery is so sluggish?

People buried to their nostrils in student loan debt won’t be buying homes any time soon.  If you find yourself deep in student loan debt, at least take advantage of low interest rates and consolidate your loans.

They also won’t likely be investing in new businesses, or investing in any other businesses.

Aside from paying rent, food and utilities, most of their earnings will be going towards repaying student loans for many, many years.

This realization is actually quite sad, because I believe in many ways astronomical levels of student loan debt is quite avoidable.

Sure, some professions, like medicine or law, requiring additional years of post-graduate work will cause graduates to naturally accumulate much higher student loan balances than others.

But for the vast majority of us, we should be able to graduate with no debt, or a modest amount that can easily be repaid within the first couple years of graduation.

Of course, that is in a perfect world, and we live in one far from perfect.

What has been perfect is the financial storm spawned in 2008 by a deep recession and the election of an administration hell-bent on creating an ever-larger dependent class.

Why Do We Owe So Much In Student Loan Debt?

With the passage of health care reform came the nationalization of the student loan industry (that’s right; most people forget student loan reform was included in the same bill).

If you want to attend college, and cannot afford it, you are now exclusively applying to the federal government for assistance, unless you go the personal loan route at much higher interest rates.

May I highly recommend avoiding enslaving yourself to the federal government in the name of obtaining a college degree.

Instead, consider the following options, which if undertaken by a majority of future college attendees just might reduce the amount of student loans required in this country.

And that would be a very good thing, freeing up new-graduate capital to invest in real estate, and the market, and unleash a born-again entrepreneurial spirit made dormant by years of being bogged down in debt.

Four Alternative to Student Loans

1. Attend a local/in-state school. Most in-state tuition is but a fraction of its out-of-state counterpart, and most state universities are comparable in terms of academic opportunities, extra-curricular activities, etc.

You have to ask yourself what’s most important – attending a great party school, or a school with a great football team, or having an Ivy League degree hanging in your office one day, or graduating debt free. Give me freedom!

2. Work. I’m not sure when it became fashionable to consider work punishment.

Kids should be encouraged to work, to have some skin in the game, when it comes to saving for and funding their education.

I needed student loans for college, but offset some of the cost by working my way through.

3. Parents should save for their kids’ education. I often hear financial gurus reminding parents to save for their retirement because you can get a loan to send your kid to school, but your retirement cannot be financed.

Great advice; if you want your kids to graduate owing $40,000 to the federal government. Parents should do all they can to take care of their retirement needs and put away enough to help their kids with school. Kids should do their part as well.

4. Consider military service. If I were a teenager considering college with no savings and parents in a poor financial situation, I would strongly consider military service as an alternative to accumulating student loans, or farting around my parents house for four years after graduating high school.

While in the military, you will likely learn more life skills than in four years of college, which will serve you well once you join the private sector later.

Obviously, it is tough to account for every scenario.

I’m sure many of you reading this believe your situation is so unique that the only remaining alternative is to borrow money to go to school. For a few of you, that may even be true.

But for the rest of us, borrowing money to attend college should be a very last resort, not a forgone conclusion.  If you must, consider a low-interest loan from  They are an easy lender to work with (I consolidated credit cards there).

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