How to Pay for College

Here are some ways to pay for college—from loans to scholarships to working part time.

Attending college is more expensive now than it has ever been. Tuition alone often costs many thousands of dollars, and you also need to factor in room and board, as well as other expenses, like books and supplies. If you're planning on going to college, you'll need to figure out how you’re going to pay for it.

Some free money—in the forms of scholarships or grants—is available for students. Loans are readily available, but this option can be expensive. That said, it’s completely possible to find an affordable college experience, and many colleges still meet the great majority of their students' financial need.

Be sure to explore every avenue for financing your education and consider scholarships, grants, using your savings, working part time, and loans, among other possibilities.

Free Aid: Scholarships and Grants

Because you don’t have to pay back scholarships and grants, these options should typically be your first choice when looking for ways to pay for college.

Scholarships

Scholarships can be need-based (taking financial need into account), merit-based (not considering financial need among their criteria), or based on your chosen field. Scholarships also might be available based on where you live, your socioeconomic background, or even if you’re an average student.

To find information about scholarships, start with the financial aid office at a college or career school, a high school or TRIO counselor, or the U.S. Department of Labor’s free scholarship search tool. Ideally, you should start looking for scholarships in your local area because there’s likely less competition. Though, if you receive an "outside" scholarship—one not sponsored by the school—that scholarship might also affect the school's aid calculation. It is always good to know what scholarships a school offers, whether and how to apply for them, and how receiving a non-school sponsored scholarship will affect the school's aid calculation.

Be sure to find out whether scholarships continue for the duration of your education, only cover the first year of schooling, or are capped at a certain amount. Certain academic institutions offer generous scholarships upfront, but you have to reapply each year or maintain very high academic performance to qualify the next.

Grants

Grants—often called “gift aid”—are funded by federal and state governments, as well as schools, private organizations, and nonprofit organizations. Like scholarships, grants don’t have to be repaid. Unlike many scholarships, though, grants don’t have to be earned with qualifying prior activities and experiences. This free money is often based on need.

Grant amounts vary significantly depending on the school’s financial ability, the amount of money the state or federal government has contributed to grant programs that year, whether the school is a public or a private institution, and the student's own financial need.

Many grants require minimum levels of academic performance.

Paying Out of Pocket: Personal Savings, Getting Help From Your Parents or Other Relatives

If you’ve saved up for college—or your family members have money available to contribute to your college costs—using these savings is often the next best option after exhausting your scholarship and grant opportunities.

In fact, if you have available assets, you and your family are expected to contribute towards college costs. When you fill out you’re your college financial aid forms, you’ll have to provide information about your, and your parents’, income and financial accounts so an expected family contribution can be determined.

Consider Work Options

Also, consider working to finance all or part of your education.

Using federal work-study. You might be able to get a job through the federal work-study program. This program provides part-time jobs for undergraduate and graduate students who have financial need. A work-study job could be on campus or it might be at a participating nonprofit or public interest organization. In some cases, even for-profit corporations can participate if the work is in your field of study. The advantage for the employer is that the federal government pays some portion of your wage. The amount you can make is determined by the amount of your award.

Getting a part-time job or freelancing. Alternatively, you might want to find a part-time job or take on freelance projects to help finance your education. Generally, it’s a good idea to find work that has few demands outside the workplace. You'll already be busy with school so try to find a gig that will allow you to focus on your schoolwork when you need to.

Taking Out Loans

For many students, available scholarships, grants, and work options won't cover all of their college costs. So you might need to consider taking out student loans.

Student loans come from the federal government or from private sources, like a bank or other private lender. But not all loans are created equal.

Federal Student Loans

Federal student loans typically offer borrowers lower interest rates and have more flexible repayment options than loans from banks or other private lenders. If the government subsidizes your loan, no interest accrues:

  • while you’re in school at least half-time
  • for the first six months after you leave school (called a “grace period”), subject to some exceptions, and
  • during a period of deferment (a postponement of loan payments).

Note that to qualify for federal loan programs, the school you attend has to participate in the programs. The amount you can borrow is limited, though the amounts are regularly adjusted.

Federal student loans are awarded when you fill out the Free Application for Federal Student Aid (FAFSA). (To qualify for any form of federal aid, work-study, or a college's own private loans, a student will have to first fill out a FAFSA from the U.S. Department of Education.)

Private Student Loans

Many banks and other lenders offer private student loans. But you need to pay careful attention to the interest rates, which generally aren't as favorable as government loans. The interest rate might be higher and your payments could go up if you take out variable rate loans.

Also, private student loans usually don't have the repayment, forgiveness, or consolidation flexibility that federal student loans do.

Getting Help

To learn more about how to pay for college and about federal student loans, go to the U.S. Department of Education’s Federal Student Aid website.

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