Going to college just keeps getting more expensive, and many are trying to figure out how to pay for college. For the 2017 to 2018 school year, tuition and fees averaged $34,740 for a four-year non-profit private college. Public four-year schools averaged $9,970, which does not even include room and board. You’re looking at $20,770 if you add that in. But there are many ways to pay for college. Let’s look at some of the ways on how to pay for college.
Top 6 Ways on How To Pay For College
1. Scholarships and Grants
Scholarships and grants are the first things you should consider when determining how to pay for college, because you don’t need to pay them back. Some people use these words interchangeably, but scholarships are often based on merit, such as academic or athletic achievements and abilities. Most grants are based on need.
Thousands of scholarships and grants are offered to students each year. They could cover all your tuition or just a part of it. They can be one-time awards or renewable each year. Sources include schools, employers, individuals, private companies, nonprofits, communities, religious groups and professional and social organizations. Some scholarships and grants are meant for those from a specific group such as students who are Native Americans or are from military families.
The trick is finding scholarships and grants where you meet the criteria. Try these free sources of information:
- The college’s financial aid office
- Your high school counselor
- A TRIO The TRIO programs are federal outreach and student services programs for people from disadvantaged backgrounds.
- The U.S. Department of Labor’s free scholarship search tool
- Federal agencies. If you are an undergraduate, you may want to apply for a Federal Pell Grant. These are capped at $5,920 a year and usually are for students from families with income under$30,000 per year.
- Your state grant agency. For state scholarships and grants, see this page to choose your state and search.
- Internet research and your library’s reference section
- Search for outside scholarships. You can search online on the College Board’s Scholarship Search page for scholarships, other financial aid and internships from more than 2,200 programs totaling nearly $6 billion. Businesses, civic group, community organizations, foundations and religious organizations offer scholarships and grants, as do organizations and professional associations in various areas of interest.
- Ethnic organizations
- Your employer or your parents’ employers
You must apply as much as a year in advance for some scholarships and grants, so start looking early. As a first step, you may need to complete financial aid forms such as the Free Application for Federal Student Aid (FAFSA) and the CSS/Financial Aid PROFILE™®. You will need to complete FAFSA to apply for federal aid. The College Board’s CSS PROFILE is an online application that collects information used by almost 400 colleges, universities, professional schools, and scholarship programs to award financial aid from sources outside of the federal government. Contact the school you plan to attend to ask what forms you must complete to apply for your colleges gift aid. They may require one of the forms just mentioned.
2. Free Tuition Schools and Tuition Waivers
Some colleges do not charge tuition to any of their students. Of course, there are still other college costs, but if a tuition-free school fills your needs, it is a great way to whittle down your expenditure. Have a look at this list of tuition-free colleges as a start in your college search.
Other universities grant full and part-time tuition waivers (link to our article on tuition waivers) for a variety of reasons.
- Need: Many universities such as Harvard and Cornell grant tuition waivers to undergraduate students from lower income families. The lines are often below $40,000 or $60,000 in income.
- Diversity: Some schools offer tuition waivers to help historically disadvantaged groups and increase diversity on campus.
- Unemployment: Some public schools offer tuition waivers to individuals who have been long-term unemployed.
- Disability: Some schools offer tuition waivers to the permanently disabled.
- Adoption: Public universities in many states offer tuition waivers to students who were either adopted or in foster care.
- Hardship History: Some schools have programs for those who have undergone specific types of hardship.
- Senior Citizens: Many schools offer free audit programs for seniors.
- Veterans: Tuition waivers are often available for veterans and active military personnel.
- School and Government Jobs: 145,000 graduate students receive partial or full tuition waivers, and many receive teaching or research stipends. Almost all PhD. students receive both tuition waivers and stipends. Many schools extend tuition waivers to employees other than research assistants and to their families.
- Employer Tuition Reimbursement: Some companies pay tuition for their employees who meet their designated criteria.
3. Student Loans
Student loans are often the number one thing people consider when trying to figure out how to pay for college. For student loans there are two main options:
- Federal student loans are made by the Department of Education through the Federal Student Loan Program.
- Private student loans are made by banks and other financial institutions such as credit unions.
Federal student loans offer consistent protections that include flexible repayment options including deferment and forbearance for those who are having trouble paying or who are in special circumstances (such as active military service). Fixed federal student loan rates are set by Congress and are not based on the borrower’s credit rating. Parents may apply for loans to fund their children’s education with Parent PLUS loans.
Private student loan rates may be fixed or variable, and each financial institution has their own criteria for determining rates based on credit history and other factors. Private student loans generally do not include the same protections and repayment flexibility as federal student loans, though this varies among lenders.
To apply for a federal student loan, start by completing an FAFSA Form (Free Application for Federal Student Aid). To apply for a private student loan, contact your bank or credit union, or some of the Internet lending institutions who make student loans such as CommonBond or SoFi.
4. Friends & Family
Many people have parents who give or loan them money to go to school, but it is possible to look further afield to extended family and friends for loans. Usually, people do this after first exploring other options, because of the potential for personal drama if the student is unable to repay the loan in a timely fashion. When borrowing money of this amount, you will likely enter into a legal contract with the lender, who can then sue you if you don’t repay on time.
If you decide to go this route, follow these guidelines:
- Ask someone who can truly afford to loan you the money. Be sure you will not be putting them into a difficult financial situation.
- Talk about repayment terms and what will happen if you cannot pay on time for some reason such as losing your job.
- Have an attorney draw up the contract.
- Pay interest even if Aunt Gertie says you don’t have to. It will help facilitate good feelings.
- Pay on time. Don’t take advantage of your special relationship with the lender.
5. Federal Work-Study Program
The Federal Work-Study program helps students with financial need pay for their educations by providing them with part-time jobs. Both undergraduate and graduate students are eligible. Jobs are both on and off campus, and they are often related to the student’s field of study. You may just be assigned a job, but you may be asked to apply for and interview for specific jobs. The program favors jobs that emphasize community service and civic education.
Work-study awards are made on the basis of
- When you apply (The earlier, the better.)
- Your financial need
- Your school’s funding level
You will make at least minimum wage, but you may make more. However, the amount you earn can’t exceed your total Federal Work-Study award. Check with your school’s financial aid office to see if your school participates.
To qualify for work-study, you must file the Free Application for Federal Student Aid (FAFSA) form. Jobs are on a first come, first serve basis and funds are limited, so apply early.
6. 529 Savings Plans
A 529 plan is a tax-advantaged savings plan designed to encourage saving for future college costs. They are governed by Section 529 of the Internal Revenue Code and are sponsored by states, state agencies or educational institutions.
There are two kinds of 529 plans.
- Prepaid tuition plans let you buy credits at participating colleges and universities for future tuition and mandatory fees. Prepaid tuition plans usually cannot be used to pay for future room and board. These are usually for in-state, public schools.
- College savings plans let you open an investment account to save for future qualified higher education expenses that may include room and board in addition to tuition and mandatory fees. Withdrawals may usually be used at any college or university.
The National Association of State Treasurers created the College Savings Plan Network , which provides links to most 529 plan websites. You can search for an investment adviser and information on their background on Investor.gov.
Other Options to Help Pay For College
Claim a Tax Credit
Reduce your educational expenses by $2,500 each year by taking a tax credit if you qualify. Consider the Lifetime Learning Credit (LLC) and the American Opportunity Credit (AOC). You must be on a degree track to take the AOC, but you can take the LLC just to improve job skills. The IRS has laid out additional differences in a table.
Live with Your Parents
If you live near a college, and it’s possible to go to school while living with your parents, it will save you a lot of money. Room and board can cost as much as tuition at many schools.
Plan Early and Thoroughly
It’s not easy to afford college these days, but figuring out how to pay for college will make attending much easier. Research and apply for scholarships, grants and work-study jobs early. Investigate a variety of loan options. Leave no stone unturned, because you can use a combination of methods to pay for college.