11 Ways to Pay for College

Once you've gotten accepted to the college of your choice, the real work begins. Paying for college typically requires a combination of funding sources — most students use some variation of loans, grants, scholarships, work-study programs, college savings plans or funds from their parents.

Although many students take out loans to cover expenses, numerous other options exist to help minimize higher education costs. Below are some ways to pay for college, ordered from the most common and recommended funding sources, with a focus on minimizing incurring debt.

A 529 college savings plan is a tax-advantaged investment account to help families save for future education expenses. These plans, sponsored by states, state agencies or educational institutions, offer significant tax benefits. Contributions grow tax-free, and withdrawals for qualified education expenses, such as tuition, fees, room and board and other related costs, are also tax-free.

There are two main types of 529 plans: prepaid tuition plans and education savings plans. Prepaid tuition plans allow you to lock in tuition rates at eligible public and private colleges and universities. In contrast, education savings plans offer investment options like 401(k) or IRA. To start, you select a plan and open an account in your or the beneficiary's name.

Parents, grandparents or others can make regular contributions, and many plans offer automatic contribution options. Depending on the plan, you can choose from various investment options and withdraw funds tax-free to pay for qualified education expenses.

Federal financial aid is essential for most students to help cover the cost of college. It includes grants, loans, and work-study programs, all of which require completion of the Free Application for Federal Student Aid (FAFSA). Depending on the type of financial aid, the funds can be used to pay housing expenses, renters insurance, transportation, textbooks, supplies and more.

The cost of living during college can vary widely depending on where you attend school and could be much higher or lower than your hometown. The FAFSA can help you determine how to access specific types of financial aid and if you qualify for grants and other support.

Grants and scholarships are financial aids that do not require repayment, making them highly desirable for students seeking to minimize their college debt. Grants are typically need-based, while scholarships can be awarded based on merit, background, interests or financial need. Both federal and state governments, as well as private organizations, offer these forms of aid.

The federal Pell Grant is one of the most well-known need-based grants. It provides substantial aid to undergraduate students who demonstrate significant financial need, as determined by the FAFSA. Another important federal grant is the Federal Supplemental Educational Opportunity Grant (FSEOG), awarded to students with exceptional financial need. Unlike the Pell Grant, FSEOG funds are limited, and not all schools participate in this program, so it's wise to apply early.

Scholarships, on the other hand, are awarded based on various criteria, including academic excellence, athletic ability, artistic talent or specific interests and demographics. For example, scholarships might be available for students pursuing specific fields of study, those with unique talents or individuals from underrepresented backgrounds.

Finding scholarships requires diligent research. Start by exploring opportunities offered by the colleges or universities you plan to attend, as many institutions have their scholarship programs. Numerous online scholarship search engines can help you find opportunities that match your profile. Applying for multiple scholarships and grants can significantly reduce the financial burden of college. Pay attention to deadlines and specific eligibility requirements to maximize your aid chances.

Work-study jobs offer part-time employment to undergraduate and graduate students with financial needs, helping them pay for education expenses. Students can find work-study jobs both on-campus and off-campus. On-campus jobs might include positions in the library, dining halls, administrative offices or as research assistants. These positions are often flexible, accommodating students' class schedules. Off-campus jobs can be found in retail, food service, tutoring or other local businesses. Some students may also find internships that align with their field of study, providing income and relevant career experience.

Work-study jobs pay at least the federal minimum wage, but actual wages can be higher based on the job's nature and required skills. Earnings are limited to the amount in the student's financial aid award letter. Beyond financial assistance, work-study programs can offer benefits like work experience, time management skills and professional networking. To qualify, students must complete the FAFSA to determine financial need. Eligible students receive work-study as part of their financial aid package.

No-loan schools are institutions that have committed to meeting 100% of their student's demonstrated financial need without requiring them to take out loans. These schools typically have substantial endowments, allowing them to offer generous financial aid packages. Instead of loans, these schools provide grants, scholarships and work-study opportunities to cover the cost of tuition, fees and room and board.

To apply for financial aid at no-loan schools, students must complete the FAFSA and often the CSS Profile, which provides a more detailed picture of the family's financial situation. The financial aid offices at these schools then determine the student's financial need and create a package that covers the full cost of attendance through grants, scholarships and work-study opportunities without needing loans.

Examples of no-loan schools include prestigious institutions like Harvard University, Princeton University and Stanford University. These schools have committed to reducing the financial burden on their students, ensuring that a college education remains within reach for all admitted students, regardless of their financial background.

Many companies offer employer tuition assistance programs to help their employees pay for college. These programs can cover various expenses, including tuition, fees and sometimes books and supplies. Typically, these programs reimburse courses related to the employee's current job or future career development within the company. Some employers offer tuition assistance for accredited programs, while others may have specific guidelines on which courses or degrees qualify. The amount of assistance can vary widely, with some companies offering partial reimbursement and others covering full tuition costs.

Employees must meet certain criteria to take advantage of employer tuition assistance, such as maintaining a specific grade point average and staying with the company for a certain period after completing the coursework. Check with the employer's human resources department for specific program details and application procedures.

Reserve Officers' Training Corps (ROTC) programs are college-based officer training programs for students who wish to serve in the U.S. Armed Forces. These programs offer significant financial assistance for tuition, fees and other educational expenses in exchange for a commitment to serve in the military after graduation. ROTC programs are available for the Army, Navy and Air Force, combining military education with regular college coursework.

Students enrolled in ROTC programs attend regular college classes while participating in military training and leadership development activities. The program typically includes courses in military science, physical training and field exercises. Upon graduation, students are commissioned as officers in their respective military branches and must serve for a specified period.

To apply for an ROTC scholarship, students need to meet eligibility criteria, including academic performance, physical fitness standards and a commitment to military service. The application process typically involves submitting transcripts, test scores, physical fitness assessments and interviews.

Tuition payment plans offer families a flexible and manageable way to pay for college expenses by breaking down the cost into monthly installments rather than requiring a lump sum payment at the beginning of the semester or quarter. These plans are typically offered directly by colleges and universities or through third-party service providers. They usually require an enrollment fee but do not charge interest, making them a cost-effective alternative to student loans.

By spreading payments over several months, families can manage their finances more effectively and avoid the stress of large upfront payments. However, it's important to note that while payment plans do not accrue interest, they typically require a small enrollment fee and may impose late fees for missed payments. Not all colleges offer payment plans, and the terms can vary widely between institutions.

The federal government provides federal student loans and offers several benefits, including lower interest rates and more flexible repayment options than private loans. Two main types of federal student loans are direct subsidized loans and direct unsubsidized loans. Loans subsidized by the federal government enable students to use the funds interest-free until they leave school. Unsubsidized loans begin accruing interest once the money is disbursed to the student. Frequently tapped federal financial aid options include Stafford, Perkins and PLUS loans.

Students must complete the FAFSA to apply for federal student loans. After submitting the FAFSA, students receive a financial aid award letter from their school detailing the types and amounts of aid they can receive.

Banks, credit unions and other financial institutions offer private student loans to help cover college costs not met by federal financial aid, scholarships or grants. However, private student loans should be considered a last resort due to their higher interest rates, less flexible repayment options and credit check requirements.

Unlike federal loans, private loans often have variable interest rates that can increase over time. Terms and conditions vary widely by lender, making shopping around and comparing offers essential. Applying for private student loans involves a credit check, and the interest rate offered depends on the borrower's credit history. Students with limited credit history may need a co-signer, such as a parent or guardian, to qualify.

Repayment options for private loans are generally less flexible than those for federal loans. Some lenders offer deferment or forbearance options, which are usually less generous than federal programs. Repayment plans may include interest-only payments while in school or full principal and interest payments starting immediately.

Regional tuition exchange programs allow students to attend out-of-state colleges and universities at a reduced tuition rate. These programs are agreements between states to provide lower tuition rates for students from participating states. They aim to promote access to education and reduce the financial burden on students who wish to study in neighboring states.

One of the most well-known programs is the Western Undergraduate Exchange (WUE), which allows students from Western states to attend participating schools at no more than 150% of the in-state tuition rate. Similarly, the Midwest Student Exchange Program (MSEP) provides discounted tuition for students from Midwestern states, and the New England Regional Student Program (NERSP) offers reduced rates for students from New England states.

Students interested in regional tuition exchange programs should research the specific agreements available in their region and the participating institutions. Each program has its own eligibility criteria, application processes and deadlines. Generally, students need to apply for the program through their desired college or university's admissions or financial aid office.

The best way to make college more affordable is to reduce the overall cost of higher education before you enter it. There are several strategies to do so, such as Advanced Placement (AP) programs, dual-enrollment credits and prior learning assessments. You can also utilize a military service history to receive funds for education and maximize opportunities to reduce college costs. These methods can lower the financial burden of pursuing higher education.

Advanced Placement (AP) program courses are college-level classes offered in high school in various subjects, including math, science, history and languages. Students take an AP exam at the end of the course, and many colleges and universities grant credit or advanced placement based on the exam scores. The College Board administers the AP program, which is widely recognized across the United States. Students who score well on AP exams can often bypass introductory courses in college, potentially saving thousands of dollars in tuition and fees.

AP credits offer several benefits. They can accelerate the time to degree completion, reduce overall college costs and ease the transition from high school to college. Additionally, performing well in AP programs can strengthen a student's college application, demonstrating their ability to handle challenging coursework. However, it's important to note that accepting AP credits varies by institution. Students should check with their prospective colleges to understand their policies on credit transfer.

Dual-enrollment credits are another excellent way for high school students to earn college credits before they even set foot on a college campus. Dual enrollment programs allow high school students to take college courses and simultaneously earn high school and college credit. These courses can be taken at a community college, a nearby university or sometimes even at the high school itself if the school partners with a local college. Also, note that the acceptance of dual-enrollment credits varies by institution. Students should check with their prospective colleges to understand their policies on credit transfer.

Prior learning assessments (PLAs) are evaluations that colleges and universities use to recognize and award academic credit for learning acquired outside the traditional classroom. This learning can come from work experience, military service, volunteer work, independent study, professional certifications and other life experiences. By assessing prior learning, students can shorten the time needed to complete a degree and reduce overall educational costs.

According to a 2020 report from the Council for Adult and Experiential Learning and the Western Interstate Commission for Higher Education, adult students with credit for prior learning saved, on average, $1,481 at two-year public institutions, $3,794 at public four-year institutions and $10,220 at four-year private nonprofit institutions. Planning financially for programs like AmeriCorps and Peace Corps can further help reduce educational costs.

To benefit from PLAs, students need to research and identify which colleges and universities recognize these assessments and understand the specific requirements and processes involved. Proper documentation and evidence of learning are crucial for successful evaluation.

Veterans and U.S. military members are uniquely eligible for academic benefits. If you served on active duty after September 11, 2001, and were honorably discharged, you may qualify for the Post-9/11 GI Bill, which provides funding for annual tuition plus money for housing and books. If your service ended before September 11, 2001, you might qualify for the Montgomery GI Bill, which also provides funds for veterans over several years. These are just two of the many grants and education assistance programs available to veterans.

Students who have met the requirements for 100% reimbursement in the Post 9/11 GI Bill are also eligible for Yellow Ribbon benefits, by which degree-granting institutions absorb some or all of the tuition and fees not covered by the GI Bill.

Veteran students should also consider the cost-saving benefits of purchasing a home rather than renting. VA home loans require no down payment or mortgage insurance, have low to no closing costs and are easier to qualify for, making them ideal options for Veterans.

Whether you're looking for ways to lower college costs, explore work-study benefits or find specific programs for graduate studies, these answers will provide you with the guidance you need.