As summer break approaches, many students are looking forward to lounging by the pool or hanging with friends. But amid the sunshine and downtime, this is also a prime opportunity to begin planning for their financial future. With the Common Application and other college admissions applications opening on August 1, now may be the perfect time for students to not only kick off their journey toward their dream school — but also to start exploring ways to graduate debt free.

According to a January 2025 NerdWallet article, the average undergraduate borrower owes $29,300. While young adults may not want to think about post-graduation debt before even starting college, their future self will benefit from avoiding the long-term commitment of paying off student loans and excess credit card spending from college. This may seem like a lofty goal, but there are several strategies students can utilize to reduce their debt burden and maximize financial independence post-graduation.

Take advantage of multiple strategies to pay for college.

There are many smart decisions students can make in advance to help minimize or eliminate student loans. Before taking on debt to pay for higher education, they may want to consider several options:

• Fill out the Free Application for Federal Student Aid (FAFSA). There are no parental income limitations to fill out the FAFSA or qualify for federal student aid. In addition to federal funding, many states and colleges determine eligibility for financial aid, including options that students do not have to pay back such as grants, scholarships, work-study, and need-based aid, dependent on the results of FAFSA. The information provided within the FAFSA will produce a Student Aid Index (SAI) that schools use to calculate the amount of federal student aid students are eligible to receive.
• Research colleges that meet 100% of demonstrated financial need. Acceptance into a school that meets a high percentage or 100% of demonstrated financial need is helpful in advancing the goal of graduating debt free. The university will provide financial aid to cover the difference between the cost of attendance and the SAI.
• Explore colleges that offer significant tuition discounts. Some even offer full-tuition scholarships to attract top students, like those who graduate as valedictorian or salutatorian of their class.
• Apply diligently to scholarships. Don’t overlook those offering smaller amounts. For example, many firms and charities in your local community will offer scholarships for $1,000 and often receive fewer applicants compared to national, full-tuition scholarships. These smaller check sizes can add up!

Student loans are not the only debt that young adults need to avoid.

While it can be exciting to decorate a dorm room and have dinners out with new friends, students should do this with a budget in mind and be careful not to overspend via credit cards. While it may be tempting to charge purchases, credit cards are not “free money.” According to a 2024 survey, cardholders between the ages of 18 and 34 have an average credit card debt $4,070. Students need to be mindful of some of the dynamics around managing credit cards in college:

• Be aware of credit card companies’ marketing tactics. If students see a credit card company on campus with an enticing offer, they should first research the credit card and credit limit that is most appropriate for them. These offers may be charging students with higher interest rates and fees.
• Avoid taking on too much credit card debt during college. Doing so may risk lowering their credit score. This can have a wide range of consequences later in life including higher interest rates and fewer options on future credit cards, loans, and mortgages. They may also face higher premiums on auto and homeowners’ insurance or have a hard time renting an apartment. Not to mention future employers may request access to their credit report, which is a detailed breakdown of credit history prepared by the three major U.S. credit bureaus – Equifax, Experian, and TransUnion.
• To help increase their credit score, ensure all payments are made on time.To help with their credit card balances, students can also request credit limit increases. They can avoid unnecessary credit inquiries by applying only to the credit cards they need. If students find themselves with credit card debt, proactively contacting their credit card companies to request a decrease in their interest rate can help save money over the long term. Even a small decrease can significantly shorten the amount of time it takes to become debt free, which can help boost their credit score.

The smart decisions students make in young adulthood on where they attend college, how to pay for it, and properly managing credit can set them on a positive path to lifelong financial independence and wellness.

This is for informational purposes only. The information provided does not purport to present a complete picture, but Focus Partners believes the information is representative of issues and needs facing some clients and why they may seek this service. Nor should it be construed as, specific investment, tax, or legal advice. Individuals should seek advice from their wealth advisor or other advisors before undertaking actions in response to the matters discussed. No client or prospective should assume the above information serves as the receipt of, or substitute for, personalized individual advice.

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