The 2025-26 college bills are just arriving and coming due soon. This year’s payment strategy differs significantly from prior years due to the changes introduced by the One Big Beautiful Bill Act (OBBBA). Here are 10 tips on paying for college and avoiding excessive debt. A more detailed discussion of the 2025-26 payment steps can be found in “Paying Your College Bill is Different.” Reading both will improve your outcome and payment strategy.
Every year, while in college, students make student loan decisions that will affect their financial future. They are part of the 20 million people paying for college and accumulating student loan debt. These people are both students and parents. I consider these borrowers to be the “Forgotten Group” since there are minimal resources to help them with their student debt decisions and the related lack of outcome transparency.
Often, the student debt accumulates without the borrower understanding how this will affect their life after graduation. Some states have proposed that college students get an update of their current loan balance each year. This process may help, but they still need to project their total debt at graduation, which is the problem.
At PayForED, we believe it is essential to take steps to avoid excessive student debt. We have developed our in-college solution that provides the missing transparency needed for the student loan decision process. The best way to avoid excessive loans is to stay on track and graduate on time. This goal sounds easy, but only about 41 percent accomplish this goal.
Here are PayForED’s 10 Tips for Paying for College and Avoiding Excessive Debt:
1. Understanding your College Credits
A college student is considered a full-time student with 12 credits. In most cases, students cannot graduate within four years if they only take 12 credits per semester. Considering that 35% of students will transfer and over 50% will change majors, understanding the number of credits needed to graduate is critical. This process may seem simple, but in many cases, students do not adequately plan their credit hours. The best way to save money is to graduate on time.
2. Timing of Courses
Many colleges design their curriculum to fit most students as they progress toward graduation. As a result, some courses are only offered during specific semesters. As an example, a student’s upper-level courses may only be offered in the Spring or Fall. In addition to tracking the total credits, students must map the required courses for their academic major and when each course is offered. A review of credits and when each course is offered is needed at each registration period.
3. College Credit Tuition
Students and parents need to understand their tuition expenses. For many colleges, you pay as a full-time student. The number of credits a student can enroll in could vary from 12 – 18 credits per semester. As more students transfer and change majors, using the total credits allowed may permit a student to take an additional course without added cost. Depending on the school’s policy, this could be a great way to save money and graduate on time.
4. Annual Federal Loan Limits
The proper debt structure is critical to a student’s financial future. It is often minimized when planning for college. This debt projection is challenging due to the need for more transparency and the financial aid complexities. We always recommend that a student take the Federal Direct Stafford Loan each year while an undergraduate. This decision will improve the student’s loan repayment and forgiveness options after graduation. The annual limit will be adjusted based on the academic progress of the student and whether they are full-time or part-time. The FAFSA will need to be submitted to get access to these loans.
Due to the OBBBA, proper use of Parent Plus and Grad PLUS loans in school year 2025-26 will give you access to a three-year runway of the current rules. If you do not take the PLUS loans this year, you will likely default to the new rules, which are not as generous.
5. Incurred and Projected Debt
Earlier, I discussed the importance of tracking student credits to ensure they are on the path to graduation on their targeted date. More colleges and even some states require colleges to send letters each year to students stating the current federal debt they have incurred. This notification is an improvement, but it is only one part of the solution.
Students and parents need to have both incurred and projected debt to graduation. To make the best college financial decisions, families need to know the “WHAT” they will pay and the “HOW” they will pay it. The “HOW” is custom to each family and determines the debt structure. This process is even more critical for the 2025-26 school year.
The PayForED, In-College Payer software, helps students and parents project their debt to graduation. It builds a personal budget using the projected income and loan repayment options. This approach enables the family to envision the “WHAT” and “HOW” in their situation. As a result, they can make informed college financial decisions and avoid excessive student debt.
6. Understanding of Loan Repayment Options
A student’s debt structure drives their loan repayment options. Federal Student Loans have better loan repayment and forgiveness options than private loans. Depending on the type and date of the loan, there are several federal loan options. Only specific loan repayment options qualify for loan forgiveness. Having an outcome focus improves a student’s financial future.
The repayment rules are also changing starting on July 1, 2026. Starting repayment earlier may improve your repayment and forgiveness options.
7. Career Income and Demand
Following your dream is integral to the college experience and the decision on your academic major. The student must investigate the demand for that career and the income potential as part of that decision. There needs to be a sense of reality in chasing a career dream. Many students have the impression that attaining a college degree is a guarantee of a secure financial future. That is only true sometimes. Understanding the financial outcome is critical in these decisions.
8. Tax Strategies
Various tax strategies should be considered as part of any college payment strategy. For example, the American Opportunity Credit is worth up to $2,500 per year per student. This is limited to undergraduate students and can only be used for four years. Tax harvesting and business owner advantages can also be utilized. Some advanced planning is required to take advantage of these advanced strategies.
9. Using summer courses
A great way to save money is to take summer courses. Students can get ahead or use summer courses to get back on track if they need to catch up in credits due to a transfer or academic major change. Summer courses can also help to minimize debt. Students should always check with their current college and get approval before enrolling in any summer courses. Each college is different and may have specific guidelines for course approval.
10. Planning for Post-Graduate
Over the past few years, more careers have required additional education to achieve the desired career. Planning for this additional cost and debt must be made in the college decision process as soon as possible. Using all the assets for an undergraduate degree may not always be the best decision. Graduate loans have much higher interest rates and fees. My current presentations discuss how students and parents must envision their child’s life at age 25. This planning would include education requirements, income, and student debt.
Post-graduate degrees will see the first major impact to the new federal loan system. Due to the new federal loan limits, the need for private loans may change the student’s original plans. More parents will need to co-sign private loans for graduate school due to these changes.
10 Tips to Avoiding Excessive Student Loan Debt Conclusion
The path to a college degree is very different today. Examining college expenses, projected debt, and future income is essential to the college financial decision process. Managing expectations and lifestyle needs to be added to a student’s plan, especially as the student progresses through college. Graduating on time with manageable debt is the goal and which we feel should be reviewed yearly. If you need additional help projecting college debt, the PayForED, In-College Payer software can give you customized answers.
The new changes related to OBBBA may require professional advice. PayForEd has advisors trained in these areas that have a FINRA listed Designation called the College Funding and Student Loan Advisor (CFSLA). PayForEd can help families make informed decisions.
