Whether you’re a high school student researching which school to apply to or you’ve already gotten an acceptance letter, it’s never too early to start thinking about cost. College tuition and other school expenses can add up.
There are plenty of ways to pay for school, as long as you know your options. The earlier you start to plan, the more time you can devote to things like choosing classes and picking a major.
Here’s how to pay for college when you might not have enough of your own cash to cover expenses:
1. Save early with a 529 plan
It’s easier to save a little bit over a long period of time rather than saving a lump sum quickly. If your family hasn’t done so already, and you have time before you start college, save early with a 529 plan. In fact, you can open a 529 account and start saving as early as the day someone is born — they just need a Social Security number.
A 529 savings account is made to help you save on the cost of college when the time for school arrives. There are two different types of 529 plans: a 529 savings plan which provides tax advantages on investments that you use to pay for your child’s future college expenses and a 529 tuition plan that lets you prepay tuition at today’s rates.
Here are some of the benefits of starting 529 plan:
- Anyone can contribute to this plan, not just parents or guardians, but any friends and family who want to send gifts for a new baby or child.
- Earnings in the plan grow tax-free and as long as the money that’s taken out goes toward college costs; withdrawals aren’t taxed, either.
- Some states offer tax deductions and credits as well, and you don’t need to report contributions on your federal tax return.
- You can change beneficiaries to another child or relative if the original recipient decides not to attend college.
The money put into a 529 plan can be used for anything, but it’s a different story for the earnings. The earnings can only be used for qualifying higher education expenses (like tuition and fees, books and supplies, computers, and sometimes room and board) or tuition for elementary or secondary schools.
Tip: Nearly every state has some sort of 529 plan. The sooner you start a 529 plan, the less you need to pay for costs when college starts.[ Jump to top ]
2. Attend a cheaper school
If you have your heart set on the four-year school of your dreams and the price tag is holding you up, consider attending a community college for a while and then transferring to a public university later. This is also known as the 2+2 program.
The 2+2 program is when you spend your first two years at a community college, earning an associate’s degree or similar certification. Then you transfer to a public university or another school of your choice for the last two years of college. This is a good idea for many reasons:
- Lower price tag: Community college’s cost of tuition, fees, and overall living expenses is typically much less.
- Controlled learning environment: Class sizes and campuses are smaller at community colleges.
- Alternative schedules: If you work full-time or class offerings overlap, community colleges tend to have friendlier class schedules.
Tip: Almost every school has a cost calculator on their website to know how much you’re going to pay for that specific institution. Check them out to see what your estimated college costs will be.[ Jump to top ]
3. Apply for scholarships and grants
The best way to pay for your college education is to use the money you don’t have to give back. Scholarships and grants should be your first step.
Scholarships are merit-based, usually determined by academic (or athletic) performance. Grants are needs-based, or if you’re struggling to afford college. As long as you qualify, you can apply for either. Here’s where to look:
- Consider all options: Scholarships and grants come in all forms, from federal, state, and local offerings to industry-specific types.
- Count on community: Many community groups — like religious organizations or businesses — offer free money as well. There is no shortage of scholarships and grants, but finding them might take some extra sleuthing.
- Look early: It’s best to start looking for all the free money you can as early in the game as possible. Many want essays, transcripts, and letters of recommendations. These can take a lot of time to gather and submit.
If you’ve already been accepted into a school, see if they offer college-specific grants and scholarships. Reach out to your financial aid office to see what’s available.
Tip: The best applications are the ones that are thoughtful and specific to the group giving out the cash. Start looking for free money opportunities on sites like the U.S. Department of Labor’s Scholarship Finder.[ Jump to top ]
4. Take out federal student loans
After trying to get as much free money as possible, apply for federal student loans administered by the U.S. Department of Education. Interest rates on federal student loans are fixed for life, and have flexible repayment terms. There’s even a grace period for repayment, starting six months after you graduate. Some other loans require you to start repayment while you’re still in school.
Keep in mind that there are several different types of federal student loans, and that graduate students and parents pay higher interest rates than undergraduates:
- Direct Subsidized Loans: For undergraduate students based on financial need.
- Direct Unsubsidized Loans: For undergraduate, graduate, and professional students that isn’t based on need.
- Direct PLUS Loans: For graduate and professional college students and parents of dependent undergraduates. It’s not based on need and a credit check is required.
- Direct Consolidation Loan: For combining all your federal ones into one loan payment.
Tip: To get student loans and other federal aid, apply for the FAFSA, or the Free Application for Federal Student Aid.[ Jump to top ]
5. Consider private student loans
While federal student loans come from the government, lenders handle private student loans. This is a great option if you’ve hit your limits on the most affordable federal loans and still need money to pay for college. Federal PLUS loans carry the highest interest rates and fees of any federal loan, so you may be able to get better rates from a private lender.
There are a few major ways in which private loans differ from federal loans:
- Qualification: Not all lenders are created equal. One lender can reject you while another can accept you — it’s all a matter of their own requirements.
- Rates: While the rates on federal student loans are fixed rates, private lenders can determine their own rates and qualifications.
- Credit check: Private student loans require a credit check and although you might qualify on your own, you should consider a cosigner — most private student loans are cosigned.
Tip: Do your due diligence and research private student loan companies to make sure you get the one with the lowest rates and friendliest repayment terms.Jump to top ]
6. Find a job
Going to class and studying is enough to be a full-time job, but if you can find time to work, you should. Some schools offer work-study programs.
Work-study is like a part-time job available for any student — undergraduate and graduates — based on financial need. You can be either a part-time or full-time student to qualify. But not every school offers this program, so check with your school’s financial aid office to see if they take part.
Otherwise, you can still find a job either on campus or off to earn some money. You might need the cash to pay for classes, living expenses, books, or any other financial holes that need covering.
Tip: Having a job can reduce the number of loans you need to borrow or just pay for meals that aren’t covered by financial aid awards.[ Jump to top ]
Pay for college using all your available options
Paying for college isn’t one-size-fits-all. Use every resource possible to make sure you can afford to go. While the best way to pay for college comes from all the free money you can get, not everyone has that opportunity.
There are other ways to pay for college, like federal and private student loans. While borrowing money for school means you’ll need to eventually pay it back, they’re helpful if you don’t have enough money right now to afford the price tag. Do try to keep the total amount borrowed in line with what you expect your annual salary to be after graduation.
Other ways to pay for college include federal work-study programs or part-time jobs. Having a job while in school can lower borrowing costs. It might seem like a hassle now, but will be great when you graduate and don’t owe more than you can handle in student loans. Find a school that best meets your needs, review the cost of attendance, and make sure you use every resource you can to pay for college.