How to Pay for College: 9 Options to Consider


Student loans might be the first thing that come to mind when thinking of ways to pay for a college education. But there are other options too. From grants to scholarships, here are a few ways you might help fund your degree.

Key Takeaways

  • Paying for college can be expensive, so it’s important to find a way to finance it that works for you.
  • There are lots of options to help you pay for school. Be sure to explore them all—they can be combined to help you cover your costs, and it’s important to consider and weigh all your options carefully. 
  • As well as federal and private student loans, other options to pay for college include finding a scholarship or grant, joining a work-study program or using savings.

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1. Consider the Cost of the School You Want to Attend

Your choice of school could make the biggest difference in how much you pay for your college experience. Attending an in-state public school could cut your costs by thousands of dollars each year.

Here’s how: A recent College Board report estimated that the average cost of a four-year, public, in-state school for the 2021–2022 school year was about $27,300 per year. This includes tuition, room and board, books and supplies, transportation and other expenses. A four-year public school out of state could cost an average of $44,150 per year.

Or maybe it’s worth considering alternatives to a four-year degree?

2. Fill Out a FAFSA Application for Federal Student Aid

Students can go online and fill out a form called the Free Application for Federal Student Aid, or FAFSA. It’s often the first step in applying for financial aid—including loans, grants and scholarships. Learn more about FAFSA and how it works.

Once you receive a financial aid letter from each of your school choices, you can review and compare the individual offers. You may be offered more financial aid than you need, so it’s a good idea to only accept what you can afford to pay back.

If you’re a parent helping your child pay for undergraduate college, you can also look into taking out a Parent PLUS loan. It offers a fixed interest rate and flexible loan limits. 

You typically don’t have to start paying off federal student loans until after you graduate or your enrollment status changes. But if it works for your budget, you might consider making payments before they’re required. That’s because interest can still build on what you originally borrowed while you’re in school. It can also happen during grace periods—and even when loans are in deferment or forbearance.

Depending on the type of student loan you have, you could be responsible for paying that interest thanks to a process called capitalization. And that could have a big effect on the total amount you owe and how interest is calculated.

3. Apply for Private Student Loans

While federal student loans might be based on financial need, private loans are based on credit history. Having a co-signer who has good credit may increase your chances for approval. It may also help get you a better interest rate.

There are numerous variables to consider when shopping for a private loan—interest rates, loan protection, payment plans and lender reputations. Comparing loan offers and talking to an expert can help you figure out what’s best for you.  

4. Search for Scholarships

A variety of scholarships based on grades, ethnicity, special talents or financial need are available to students. Unlike student loans, you won’t need to pay back the money you receive from scholarships.

It’s important to start applying early. Many big-ticket scholarship deadlines are in the fall. Keep in mind that some scholarship programs cut off applications after they’ve received a certain number of applications. But you can apply for as many scholarships as you like.

5. Apply for Grants

Grants for college students fall into two categories: need-based grants and merit-based grants. Grants can be applied to tuition, housing and other expenses for school.

Many grants are awarded on a first-come, first-served basis. And like scholarships, grants don’t need to be paid back.

To be eligible for all federal and some state-based grants, you’ll need to fill out the FAFSA form. Some states also have their own grants, which may require separate applications. 

Some students who can receive grants are:

One of the most common grants is the Pell Grant, which can provide undergraduate students with up to $6,895 for the 2022–2023 school year.

6. Find a Work-Study Job

Your financial aid package may include work-study. Schools that participate in the federal work-study program provide part-time jobs to both full- and part-time students to help them earn money for their education.

Students who work while in school will want to find ways to manage their work and school. Job hours will depend on the student’s course schedule and academic progress. Typically, pay will also be by the hour and at least the current federal minimum wage.

7. Take Advantage of Tax Benefits for Education

It’s also worth looking into tax benefits that are available for education-related expenses. These tax credits may help you offset the costs of education by reducing your income tax:

  • American Opportunity Tax Credit (AOTC). The AOTC provides qualifying undergraduate students who are currently enrolled in a four-year degree program with a maximum annual credit of $2,500.
  • Lifetime Learning Credit (LLC). The LLC provides undergraduate, graduate and professional degree students with a maximum $2,000 credit per tax return for qualifying tuition and expenses. There’s no limit for the number of years that a student can claim the credit—as long as they remain enrolled at an eligible institution.

8. Start Saving Early

If you’re about to leave for school, this might not be helpful. But the earlier you can start saving, the more money you might have to pay for school or to help with expenses while you’re there. Or maybe your parents have already started saving.

Even small savings goals can yield significant results. According to the Federal Student Aid office, parents who put just $14 a week into an account with a 1% interest rate could accrue more than $13,000 by the time their child reaches 17 years of age.

9. Establish a 529 Savings Plan

A 529 College Savings Plan gives parents a way to set aside money for their child’s qualifying education expenses. With this type of account, there are no taxes on what you accumulate or withdraw.

When it comes to fees, incentives and rates of return, each plan will be different depending on the state you live in. And you can invest in any state’s plan. So it’s a good idea to shop around and compare options.

Paying for College in a Nutshell

College can be expensive. Thankfully, there’s more than one way to finance the cost.

Be sure to look into every option and consider the financial implications. Remember, whatever path you take, you’ll be laying the foundation for a successful future.

Want to maximize your college savings potential? Read how you can start saving for college today.


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