How to Pay for College
6 Min Read | Published: May 29, 2024
This article contains general information and is not intended to provide information that is specific to American Express products and services. Similar products and services offered by different companies will have different features and you should always read about product details before acquiring any financial product.
Explore various ways to pay for college, including scholarships, grants, student loans, and other financial aid programs to help cover tuition costs and expenses.
At-A-Glance
- The Free Application for Federal Student Aid (FAFSA®) can help give students access to various types of financial aid opportunities for college.
- Grants, scholarships, work-study programs, and loans can help you to cover college costs.
- You can also lower your costs by starting at a community college, buying used textbooks, and graduating on time or even early.
Paying for college can seem like a daunting task, but it doesn’t have to be. There are many ways to pay for college today, including numerous financial aid options available to students and their families. In this article, we’ll outline various strategies for financing a college education, empowering you to make informed decisions and pursue your academic goals without breaking the bank.
Applying for Financial Aid
To apply for financial aid, you should fill out the Free Application for Federal Student Aid (FAFSA®).
The FAFSA can open doors to a variety of financial aid options and should be the first step you take when looking for financial aid.
When it comes to filling out the FAFSA form, FAFSA recommends that you start by creating a StudentAid.gov account. All contributors (that is, anyone who is required to provide information on the FAFSA form) are required to create a Student.Aid.gov account as well. When filling out your form, you may need to provide information including your verified account username and password, parent or spouse contributor name, their date of birth, Social Security number, email address, and income and asset information. FAFSA estimates that it takes most people less than one hour to fill in the FAFSA form.1
You can fill out FAFSA when you’re in the 12th grade, or the year before you plan to attend college. Ideally, you’ll want to fill out your FAFSA as soon as it becomes available. It’s best to complete your FAFSA as early as you can to help ensure you don’t miss out on opportunities for financial aid.2
To learn more, visit the Federal Student Aid Website, page: Filling Out the FAFSA® Form.
Several of the common types of financial aid that can help you pay for college include:3
- Grants
Grants are usually offered based on financial need. If you receive a grant, you don’t have to pay it back.
With federal and institutional grants, you will be considered for aid when you submit your FAFSA. However, you can find additional grants from your state or even private institutions. To find state grant programs, you can visit the Department of Education’s website and use the State Contacts tool to find the agency that distributes each state’s grants. In order to be eligible for grants, most states will require you to fill out the FAFSA, but some states (including Pennsylvania, New Jersey and New York) may have a separate grant application in addition to the FAFSA.4 - Scholarships
As with grants, you don’t have to repay scholarships. Some scholarships are need-based while others are merit-based and distributed based on factors like grade point average (GPA), test scores, and extracurricular activities.
Some scholarships require you to first submit the FAFSA. You may also be able to find additional scholarships by contacting the financial aid office at the school you’re planning to attend or conducting research online. - Work-Study
The Federal Work-Study Program provides jobs to qualifying students so they can make money to cover college expenses. A few examples of work-study jobs include tutors, computer lab technicians, and researchers. Filling out the FAFSA form is the only way to be considered for Federal Work-Study programs. - Federal Student Loans
Federal student loans are offered by the federal government. They may come with perks like flexible repayment plans and student loan debt forgiveness programs. However, most of them have borrowing limits, meaning you may not receive enough money to pay for your entire college education. In order to get a federal loan, you’ll first need to complete the FAFSA form. - Private Student Loans
Private student loans come from private lenders, such as banks and credit unions. While you may be able to borrow as much as you need with a private student loan, you may also need to meet certain credit and income requirements, which can be difficult to do. Private student loans may also have stricter repayment requirements and higher interest rates than federal student loans.
Did you know?
You can start researching and applying for scholarship programs when you’re between your junior and senior years in high school, allowing you to start the financial aid process early.5
Saving for College
If you’re planning ahead for college, you can also take the proactive approach and save for college.
Fortunately, there are a variety of college savings tools available. One option is using what’s known as a 529 plan. A 529 plan allows for tax-free growth and withdrawals for tuition, room and board, books, and other education-related expenses. Other options you might want to explore include brokerage accounts and savings accounts. A high yield savings account is another option you’ll want to consider. These accounts typically offer a higher yield than many traditional savings accounts and may help you grow your money faster.
Ways to Lower College Costs
Even if you have a plan to pay for college, you’ll still want to take steps to keep your costs down. Here are some tips that can help you minimize college expenses.
- Start at a Community College
Community colleges tend to be more affordable than four-year colleges and universities, offering lower tuition costs and often a lower cost of living as well. To save some cash, you can begin your education at a community college. After gaining your associate degree in two years, you can transfer to a four-year college or university to finish your degree. Just be sure to check that the four-year institution that you plan to finish at will accept credits from your community college.6 - Buy Used Textbooks
It may be convenient to buy the textbooks you need for your classes at a bookstore on campus. However, you may be able to find more affordable prices by buying them used online or through other students who sell them after they’ve completed the course. - Be Responsible With Student Loans
To save money, do your best to only borrow what you need to cover your college costs and living expenses. Overborrowing so you can upgrade your lifestyle can quickly lead to more debt, so make sure you prioritize and budget carefully while you’re studying. - Graduate on Time or Even Early
Graduating late means you could end up paying more for your overall college education. Try to be as efficient as possible and graduate on time. Even better, consider graduating earlier by earning class credits in advance if this is an option that’s available for you. - Consider Tuition Reimbursement Programs
Some employers may offer tuition reimbursement programs. If you happen to be employed by a company that offers this after you graduate or while you’re still in school, you could be reimbursed for part of or all of your college education.
Did you know?
In addition to looking for ways to keep your costs low, you can also work on building your credit while you’re in college. Having a strong credit history can help you to qualify for financial products, like a car loan or apartment rental, down the road.
Frequently Asked Questions
With subsidized loans, the federal government covers interest while you’re still in college and during six months after graduation. This offers a measure of flexibility for recent graduates who may be job hunting after graduation and may need additional time before they start making interest payments. With direct unsubsidized loans, you are responsible for paying interest during all periods.7
There are a few tax credits available to help offset college expenses. These include the American Opportunity Tax Credit (AOTC) and The Lifetime Learning Credit (LLC), both of which can help to reduce the amount of tax that you owe.8
To apply for federal grants and scholarships, you’ll want to start by visiting the FAFSA website or looking at scholarships offered by the school that you’re planning on attending.
- For Scholarships: Some scholarships will require you to first submit the FAFSA form, however, you may be able to find additional scholarships by conducting research online. You may also want to contact the financial aid office at the school you’re planning to attend.
- For Grants: With federal and institutional grants, you will be considered when you submit your FAFSA form. However, for additional grants, you’ll also want to consider local organizations, membership associations, and charitable foundations, which may provide links to available college grants on their websites. You can use the Department of Education’s State Contacts tool to find the agency that distributes each state’s grants.
Make sure you validate the authenticity of scholarships and grants before you apply.
The Takeaway
There are a variety of different ways to pay for college, such as grants, scholarships, work-study programs, and loans. In addition to these financial aid options, you can also take steps to help keep your costs low while you’re studying.
1 “Apply for Aid,” FAFSA
2 “FAFSA: When to Fill Out - Junior or Senior Year?,” CollegeVine
3 “Understanding Financial Aid for College: A Guide,” U.S. News
4 “Guide to Grants for College,” NerdWallet
5 “Find and apply for as many scholarships as you can—it’s free money for college or career school!,” Federal Student Aid
6 “10 Ways to Reduce College Costs,” Education Planner
7 “Direct Subsidized and Direct Unsubsidized Loans,” Federal Student Aid
8 “How to Pay for College Without Your Parents’ Help,” LendingTree
Anna Baluch is a personal finance writer from Cleveland, OH. She enjoys helping people from all walks of life make smart financial decisions. Her work can be seen on Credit Karma, Forbes, LendingTree, Insurify, and many other publications. Connect with Anna on LinkedIn.
All Credit Intel content is written by freelance authors and commissioned and paid for by American Express.
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