How to Pay for College: A Comprehensive Guide

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• College costs have been rising in recent years; fortunately, there are many ways to pay for it.
• Scholarships and grants are two options that do not need to be repaid.
• Federal student loans should be your top choice for borrowing, with private loans as a last resort.

Start early: planning is key

Set a budget

Before you sign any papers, estimate the cost for tuition, along with fees, books, living expenses, etc. Know exactly how much college and related expenses will cost, so you know what savings goal to work towards.

Start saving

To begin saving, consider opening a 529 plan or high-yield savings account dedicated to college expenses. A 529 plan is a type of investment account designed to help you grow the money you set aside for college. These are state-based and tied to a specific beneficiary — the student you're saving for — and as you deposit money, the funds are invested into a professionally managed portfolio. 

Explore career paths & earnings potential

Consider how your chosen field impacts potential salaries and loan repayment. A degree in engineering or medicine will be more financially fruitful than a degree in philosophy.

Free money first: scholarships & grants

Scholarships

Scholarships are among the free options for paying for college. These are financial awards given to students based on need, merit, or achievement, and they do not need to be repaid. They can come from the school you attend, your (or your parent's) employer, community groups, professional organizations, and even the government.

Scholarship search strategies

You can find potential scholarships by talking with your high school guidance counselor or your college's financial aid office or browsing sites like FastWeb. 

"I know it might sound a bit wild, but I suggest that high schoolers should aim to apply for a minimum of 50 scholarships," says Robert Farrington, founder of The College Investor. "This holds true even if you're thinking about going part-time for your studies."

Grants

In addition to scholarships, there are grants for college, which also do not need to be repaid. The federal Pell Grant, for example, offers up to $7,395 to students who have "exceptional financial need." Again, you can apply for these and other federal grants using the FAFSA. Your state and college may also have grants and scholarships you can apply for, so be sure to check with your state's education department and your school's financial aid office, too.

Federal student aid: FAFSA is your gateway

Fill out the FAFSA

To apply for federal scholarships — or any other federal student aid, for that matter — you'll need to fill out the Free Application for Federal Student Aid (FAFSA).

Understand your award letter

Your financial aid award letter details your aid package, including grants, loans, and work-study opportunities. Keep in mind that financial aid award letters are only for one school year, and you'll need to fill out the FAFSA each year you're in school to determine what aid you're eligible for.

Federal loan options

If you have the option, you'll want to take out a subsidized loan over an unsubsidized loan. Subsidized loans are made based on financial need, and the government pays the interest on your loan while you're in school. Financial need doesn't factor into unsubsidized loans, and interest begins to accrue immediately.

Other financing options

Federal vs. private student loans

When looking at federal vs. private student loans, your first choice should always be federal student loans, which are offered through the US Department of Education. These have lower interest rates and require no credit check (private loans base your rate on your credit). Federal loans also come with more repayment and forgiveness options than most private student loans.

To apply for federal student loans, you'll need to file a FAFSA every year. Once your application is processed, you'll get your loan offers and can evaluate if additional aid is needed beyond that. If it is, private student loans — which are offered through private companies and lenders — may be an option. But as Farrington puts it, "Private loans are the last resort."

Work-study

You can also consider a work-study program, which places you in a job with the goal of earning money for your education. 

"Work-study programs are a common choice on campuses," Farrington says. "They provide a flexible schedule and are tied to your financial aid. While the pay is usually minimum wage, the hours are adaptable to your class schedule."

There are federal work-study programs, or your individual school may have one.  To apply for federal work-study, you'll need to fill out the FAFSA. 

Employer tuition assistance

See if your employer offers payment assistance. Some companies offer this benefit to their employees, especially if they're planning to study in a field related to their current role.

529 plan withdrawals

If you (or your family) have any money saved in a 529, this is the time to use it!

Affording college FAQs

Can I go to college without student loans?

It is absolutely possible to go to college without loan and with scholarships, grants, savings, and work. But it takes planning and effort.

How much money do I need for college?

The amount you'll need for college will vary widely by school and location. Research and budget accordingly.

When is the FAFSA deadline?

The FAFSA deadline is usually June 30 of the academic year, but state and school deadlines can be earlier.

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