“Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver.” – Ayn Rand

Americans currently hold $1.4 trillion in outstanding federal student loan debt, in addition to the $119.31 billion of private student loan debt accounted for in 2019. Student loans may be a tool to help you get through college, but you shouldn’t enroll in college or a student loan program until you consider all your options.

  1. Is College Necessary?

If financial independence is what you're after, the first option to consider is whether you need a college degree at all. Getting a college education used to be a reliable path to financial success.  But a number of jobs – from commercial pilot to detective – are fulfilling, pay well, and don’t require a college degree. You don’t need a degree to chase fame and fortune as an actor or writer either. Ditto for video game coach.

A friend of mine, Morgan Franklin, shares how dropping out of school and going into real estate was the best thing he’s ever done, despite criticism from people close to him. 

I went to school because it was what I was supposed to do. I was always a bad student. My teachers used to tell me if I didn’t get my act together in school, then I would always struggle in life. When I was halfway through college I decided I was done with the charade. I already knew I was going to start my own business someday and had done some groundwork that summer. 

After my sophomore year, I decided to stop going to college. I started my real estate career and haven’t looked back. I’ve been busting my tail and growing ever since. This year my business will do about 15 million dollars in sales. No teams, no hype, real numbers and real work.

I think education is essential, and I’ve always loved learning. That’s exactly why I dropped out of school. I found the most valuable education by taking real action to build a business, not by sitting in a classroom.

Saving hundreds of thousands of dollars by foregoing higher education to learn from mentors and alternative resources is always an option. However, if your career aspirations do point toward college, the second option to consider is, how much? Many medical technician jobs, computer-related jobs, and food service jobs can be had with an associates degree, as can jobs in fashion, fitness, and horticulture. The tuition at a community college or state school will be much cheaper than at a four-year college or university. You could work in your chosen field while taking classes, and cover some or all of the tuition with your paycheck. 

It won’t be easy. You will need good time-management skills of course, and, because you are going to be very, very busy, the ability to trade short-term fun for long-term gratification. Contrast two hard working years with a decade or so of monthly student loan payments, however, and the tradeoff makes sense.

If a bachelor’s degree is what you want, you still have options, starting with your choice of major. Do a cost-benefit analysis. Figure out how much your degree will be worth to you, then pay accordingly. There is no reason to borrow for a college degree beyond what you can expect to earn. Consider state colleges and private online colleges. You can still work and take classes over the four years or so it will take you to get a degree to minimize the amount you will need to borrow. Those time-management skills will get an even more rigorous workout.

Before taking out a loan, make sure you exhaust all of your scholarship options.  If you win a scholarship, you will be held to the standards of the awarding organization, but you do not have to pay a scholarship back with interest. With scholarship money to cushion you financially, you can apply your discipline and time-management skills to finishing college in the least amount of time necessary.  Apply for every scholarship possible. As Ayn Rand observed, “The value of scholarships is that they offer an ambitious youth a gift of time when he needs it most: at the beginning.”

  1. Do Your Research

Beware of “free money” coming your way when entering college. You will have to pay it all back and more. Here is where financial literacy is key.

If you do choose to borrow on your path to success, do your research, and learn the differences between  multiple loan types in order to choose the loan that is best for you. 

When I was offered a federal loan of $5,000 while attending college, I assumed I should take it. Wouldn’t it be better to use that money given to me rather than dipping into my savings? Luckily my mom was financially responsible enough to stop that decision in its tracks. It’s always best to avoid taking on debt for as long as you can.

Unfortunately, “nearly 70 percent of students have not attended personal finance classes or workshops in high school and 77 percent have not done so in college. More than 55 percent of students report that they decide on their own how much they need to borrow to pay for school.”  Investing in a college education is a smart choice for many, but in order to maximize it’s benefit, you need to clearly know what you’re signing up for. If you learn about how the price of college, salary projections, debt-to-income ratio, and loan terms intermingle, the less likely you are to fall into the student debt pit of despair. Study up on common mistakes students make when taking out loans before accepting any money and you’ll be better set up for financial success.

  1. Pay Loans Back ASAP

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Loan offers may tempt you to take the longest payment plan, but you actually want to pay off your loans as quickly as possible. My friend recently told me that she deferred her student loans for another year. Even though she has a well paying full-time job that would allow her to make loan payments, she opted for the “ignore now, pay later” technique. This way, she reasoned, she can afford that fancy apartment she always dreamed of while she’s young. 

While loan deferment can seem painless at the time, you’ll rack up more debt from interest. If you defer the average student loan amount of $35,000 with the average interest rate of 5.7% for even one year, you’ll end up having to pay $2,000 more as those 12 months come to a close. 

Financial literacy websites, like NerdWallet recommend paying off your student loans as quickly as possible once you have an emergency savings fund secured. The easiest way to pay off your student loans at a faster rate is to set up automatic payments. Do biweekly payments, right after you get paid, so you aren’t even tempted to use that money for other things. If you can properly budget for it, paying off your student loans in a shorter time period by making extra payments will save you thousands on unnecessary accumulated interest. 

A lifetime of expensive college debt is not the inevitable future for Generation-Zers. By educating yourself in financial literacy, you can make smart money decisions that lead to future wealth instead. 

Maeve Ronan

About The Author:

Author: Maeve Ronan
Maeve Ronan is a Gen-Z contrarian who writes about the virtues of individualism and liberty. She has interviewed over 100 successful individuals from around the globe, gathering unique and personal insights for her upcoming book on self-improvement. Maeve has been greatly influenced by Ayn Rand's work on individual freedom, which she hopes to share with other curious young thinkers.

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