8 Best Alternatives to Student Loans

Updated on January 7, 2024

At a Glance

  • Alternatives to student loans include grants, scholarships, work-study programs, part-time work, income-sharing agreements, employer sponsorships, payment plans, and savings.
  • Grants and scholarships provide non-repayable funds, while work-study programs offer part-time jobs related to your degree.
  • Income-sharing agreements involve repaying a percentage of future salary, and employer sponsorships/payment plans offer financial assistance in exchange for work or structured payments.
  • Exploring these alternatives helps minimize reliance on student loans for funding a college education.

If you are seeking ways to pay for your education, there are several options to explore. Getting student loans for international students is a common choice, but it is not your only one. There are alternatives to student loans. Read on to learn more about them.

Are There Alternatives to Student Loans?

There are multiple options for funding a college education. You can use more than one method at the same time to cover portions of your expenses and tuition.

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8 Alternatives to Student Loans

The 8 main alternatives to student loans are explained below. Once you understand each of the options, you can figure out which ones are best for your needs.

1. Grants

A grant is a set amount of money that you never have to pay back. In the U.S., federal and state governments, colleges, universities, and non-profit organizations offer grants. 

Check with your college or university’s financial aid office. The staff are familiar with available grant programs and can help you with the application processes. You can also search for grant opportunities online.

2. Scholarships

A scholarship is similar to a grant because you don’t have to pay it back. The two categories of scholarship are need-based and merit-based. Need-based scholarships are awarded to people who are in the greatest financial need. Merit-based scholarships are awarded to people who show very high academic or athletic ability, or merit in some other field. 

Other scholarships are based on other characteristics, such as gender, ethnicity, heritage, or others. These kinds of niche scholarships tend to have less competition than ones with wider eligibility, although the award amount is also generally lower. 

You should search online for scholarship opportunities and be as thorough as you possibly can. The more well-written applications you send out the higher the likelihood that you will get one or more scholarships. 

This is especially true of niche scholarships. Don’t shy away from applications that require more effort, because they are also the ones that are likely to have a smaller number of applicants, because many people are unwilling to put in the effort.

3. Work-Study

A work-study program allows you to work part-time as an official part of your degree program. Work study allows you to gain work experience and earn a bit of money. Most work-study programs, especially for undergraduates, involve on-campus jobs such as working at the campus gym, dining hall, or library. 

In some cases, the work-study job could be related to what you are studying (e.g. teaching assistant for an education major) but this is quite unusual. Some institutions with their own work-study programs offer benefits such as discounted tuition instead of direct income. Contact your college’s financial aid office for more information.

Federal work study also comes with restrictions, so be sure to understand them and how they will affect you before you commit.

Fellowships allow graduates to help with undergraduate teaching or research in exchange for a small salary. Funding and management of graduate fellowships normally happen at the level of academic departments. Clear communication with your academic supervisor is key when considering a fellowship.

4. Part-Time Work

Instead of a work-study program, you could also get a part-time job. There is the possibility of earning a higher wage than you would have through a federal work-study program. 

It is important to maintain a good balance between your job, school, and personal time. If you dedicate too much time to work, your academic performance may suffer. Also, if you do not take time for yourself, you increase your chances of burnout or other serious emotional or health problems. One way to get around this is to maximize your work hours in the summer when your academic obligations are low or zero.

If you are on a study visa, be aware that there are limits on the number of hours you are allowed to work, depending on whether your job is on or off-campus.

5. Income-Sharing

One of the alternatives to student loans that have arisen in the last few years is income sharing. This is an agreement between you and an organization (generally the major universities, although some private companies also) that, it will pay you some amount of money. Then, after you graduate and get a job, you will pay back a set percentage of your salary for a set amount of time. 

The innovative part of income sharing agreements is that the repayment is not linked to the amount of money you got. If, for example, you get a low-paying job after graduation, and at the end of the repayment period your total repayments don’t equal the amount you were given, it does not matter. On the other hand, if you get a high-paying job, you could end up paying much more than the amount you received.

If you are considering an income-sharing agreement, it is important to understand the conditions, such as what happens if you can’t find employment. This is a way to potentially avoid decades of student loan debt, but it is still important to fully understand what you are signing up for.

6. Employer Sponsorships

Some companies, usually large professional services companies (e.g. engineering or auditing firms), offer benefits such as tuition reimbursement for new hires who are recent graduates. Normally, this is in exchange for agreeing to work for the company for a set period, usually a few years. 

Working for a company like this after graduation could be a very good way to reduce the cost of your degree and jump-start your career at the same time. Keep in mind that the eligibility for this kind of sponsorship is often quite strictly based on what you studied. If you have a particular company in mind, you should visit their website for more information about their sponsorship program.

7. Payment Plans

If you are not able to pay the full tuition amount upfront, many colleges and universities allow you to arrange a payment plan. This would be useful if you have some of the money required upfront (e.g. from scholarships or grants) but still have a shortfall. 

A payment plan would allow you to pay the remaining amount over a semester by, for example, working part-time. A payment plan would allow you to enroll without having to defer a year to save up enough to pay the full tuition upfront.  

Most schools do not charge interest on payment plans, but there are always fees for late payments, so be aware of all of the conditions.

8. Savings

Another alternative to student loans for online classes is to take one or more years to work full or part-time to save up enough money to pay for tuition. This has the benefit of removing the pressure of academic obligations. You can dedicate more time to maximizing your earnings, while still maintaining enough personal time. 

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Final Thoughts

There are several different alternatives to student loans. The best are grants and scholarships. You should dedicate a lot of time applying for ones that you are eligible for. Contact your university’s financial aid office for information and assistance. The other alternatives are getting a job or applying for an income-sharing agreement.

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Frank Gogol

I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.