7 Ways to Pay for College
Figuring out ways to pay for college can dampen school spirit before classes even begin. You want to focus on the excitement of the milestone, but the daunting prospect of how to pay for college looms large.
After all, average annual tuition and fees at four-year colleges and universities range from $9,400 for public schools to more than $37,600 for private institutions. Once you factor in the total costs of books, supplies, and daily living expenses, the average per student, per year expense is $35,331.It’s no wonder paying for college is a leading concern for parents, students, and anyone who intends to foot the bill. But we’ve got your back with strategies to ease the financial burden of paying for college — including some avenues you may not have considered. For example, did you know credit union student loans have some of the most competitive interest rates in the country?
With a bit of upfront planning, you can feel confident in all the ways to afford college.
1. Fill out the FAFSASubmitting a Free Application for Federal Student Aid (FAFSA) form is the first step to securing financial aid for college. This form determines the degree of financial need and how much support you’re qualified to receive yearly. In other words, the FAFSA is the key to unlocking federal grants, work-study programs, and other financial aid that can offer money to help pay for college.
The sooner you fill out the FAFSA, the better because some colleges award money on a first-come, first-served basis. Funds become available each October 1 for the following school year — so plan accordingly.
2. Find scholarships for collegeScholarships are a form of financial aid that the recipient doesn’t have to repay. Check with individual colleges or universities first, as they may offer merit-based scholarships to reward academic or athletic performance.
Additionally, many local credit unions offer scholarships for college students. Look into Rotary clubs, nonprofit foundations, places of worship, and community service organizations as well.
You may also want to widen the search to organizations that award scholarships based on place of employment, military service, ethnic background, or field of study. Scholarships.com is a good resource to check regularly.
3. Use grants for collegeGrants are another form of free financial aid to make college more affordable. Scholarships are often merit-based, while grant funding applies to those with genuine financial needs affording college.
FAFSA will be the ticket to federal grants, but don’t overlook additional grant funds offered by your state or school. Use this map from the U.S. Department of Education to find agencies in your state that administer grants for college.
4. Apply for work-studyFAFSA will reveal whether each student qualifies for the Federal Work-Study Program, which provides part-time jobs to students to help pay for college. However, work-study eligibility doesn’t guarantee a job; searching and applying for positions is still necessary.
Whether or not students qualify for the federal program, picking up a part-time job or paid internship during school can provide everyone some extra cash, not to mention valuable work experience (think — resume booster!).
5. Look into employer educational assistance programsNearly half of employers (48%) offer undergraduate or graduate tuition assistance, according to the Society for Human Resource Management. That means you have a near 50-50 chance of adding your (or your parent’s) employer to your list of ways to afford college.
Education benefits through work may include tuition assistance, tuition reimbursement, and employer-sponsored scholarships.
6. Tap into a college savings accountWhile students often get serious about ways to afford college in high school, it’s likely their parents started thinking about how to afford college back in the diaper days. The typical family covers 45% of their children’s college costs with money they’ve held in savings accounts, according to Sallie Mae’s How America Pays for College.
Saving for college is a long-term commitment. If you’ve been building up money in a state-sponsored 529 college savings account, you can take tax-free disbursements to pay for tuition and other qualified educational expenses.
Didn’t think that far ahead? There is no age or limit on opening a 529 — even if the student is already in college.
7. Apply for student loans
Once you’ve taken advantage of free aid and college savings, you may need to look into student loans to cover the remaining gaps. The typical family borrows about 20% of their child’s college costs, according to Sallie Mae’s study.The government may subsidize federal loans, meaning it will pay the interest accrued during schooling and six months after graduation. These loans may also offer income-driven repayment plans and loan forgiveness programs.
On the other hand, unsubsidized private loans may make the loanee responsible for paying all accrued interest, even while school is in session. So shop around to find the lowest interest rates and the best borrower protections, like flexible repayment plans.
Bank Versus Credit Union Student Loans
Although approximately 87% to 92% of student loans are federal, not all families are eligible to cover the total expenses and may need to turn to private loans from banks or credit unions.
With their national scope and accessible technology, banks are often top-of-mind as a personal loan source. However, keep in mind that bank loans typically come with higher interest rates, less personalized service, and include origination and other fees that can add up quickly.
Alternatively, credit union student loans have some of the lowest interest rates in the U.S. As community-based, not-for-profit organizations, credit unions approach the student loan process with individualized lending flexibility.
To help you make the most of your money, credit union student loans are known for:
- A quick yet personalized application process
- Lower interest rates
- Flexible repayment options
- Keeping loans on their own records (no need to ding your credit score with a credit check)
- Often waiving application, origination, disbursement, and other fees
Other Resources on How to Pay for CollegeKnowledge is power. For additional information on ways to pay for college, check out these helpful resources:
- StudentAid.gov: The official government website for federal student aid information.
- The College Investor: A millennial-focused media site with blogs, podcasts, videos, and more.
- Finaid: The self-proclaimed go-to guide for everything you need to know about affording college.
- Student Loan Planner: Blog topics break down loans by occupation or topic, which helps connect student loan payments with long-term career goals.