How To Pay for College: 10 Strategies

College costs are on the rise. In 2023-24, an undergrad student living on campus at a four-year school pays an estimated average of $60,420 at private nonprofit institutions, $46,730 at public out-of-state schools, and $28,840 at public in-state schools, according to College Board. 

And college is only getting more expensive over time, with prices for tuition and fees jumping 4.7% between February 2020 and February 2023, according to the Bureau of Labor Statistics. 

With such high costs, it's crucial to figure out how to pay for college. Fortunately, there are many options available to help fund your degree. 

1. Use a college savings plan

Investing in a college savings plan can be a great way to pay for school, and it comes with certain tax advantages. There are a few primary types of college saving plans available, including:

• 529 plans: These plans are typically started by adults on behalf of minors. Funds deposited in a 529 plan must be used for qualifying educational expenses. 
  529 plans come in two forms: prepaid tuition plans or educational savings plans. In a 529 savings plan, money is invested, grows tax-free, and can be withdrawn tax-free to pay for qualifying educational expenses. Some states also allow a tax deduction for 529 plan contributions. Prepaid tuition plans, on the other hand, typically allow you to prepay tuition at current prices. 
• Coverdell education savings accounts: These are custodial savings accounts set up by adults to pay qualifying educational expenses for minors. Beneficiaries can make tax-free withdrawals to cover qualifying costs. 

If parents, grandparents, or other eligible loved ones start investing in these plans early on, the plans can grow over time and cover a good portion of college costs. 

2. Apply for federal financial aid

The Department of Education offers several types of financial aid to students. Everyone is encouraged to apply for federal aid since applying is free and some aid doesn't need to be repaid, unlike student loans. 

Some of the different kinds of federal financial aid available include:

• Grants: Grants are a form of aid that typically doesn’t have to be repaid. They're available to undergraduates who demonstrate financial need. The maximum Pell Grant award from the Department of Education is $7,395 for the 2023-24 year. Other grants include the Federal Supplemental Educational Opportunity Grants (FSEOG), Teacher Education Assistance for College and Higher Education (TEACH) Grants, and Iraq and Afghanistan Service Grants.
• Work-study: Work-study jobs are part-time jobs designed to help you earn money for school. Jobs could be on- or off-campus, and often focus on civic education or work related to your field of study. You're guaranteed to earn at least the federal minimum wage.
• Loans: Several types of federal student loans are available, including Direct Subsidized Loans, Direct Unsubsidized Loans, and graduate or parent PLUS loans. Direct Subsidized Loans are for undergraduate students with demonstrated financial need, and the government pays interest during school and during grace periods. Other federal loans are available without demonstrating financial need, and all federal debts come with important borrower benefits, including forgiveness options and flexible payment plans like income-driven options. 

To apply for any federal aid, you’ll need to complete the Free Application for Federal Student Aid (FAFSA) each year. You generally need to be a U.S. citizen or eligible noncitizen enrolled in a qualifying educational program to qualify. 

Related: How Does the FAFSA Work?

3. Look for scholarships

Applying for scholarships can significantly help reduce the financial burden of paying for college. Like grants, scholarships are a type of financial aid that you generally don’t have to repay. Scholarships can come in various forms and cater to different student needs and backgrounds, including: 

• Merit-based scholarships: These types of scholarships are awarded based on academic achievement or accomplishments in athletics, the arts, and other areas. 
• Need-based scholarships: There are also scholarships available to students who demonstrate financial need or students who have overcome a unique challenge in their life. 
• Demographic-specific scholarships: These scholarships usually require you to be a part of a specific demographic. A few demographic-specific scholarships include Asian Pacific Fund scholarships, Hispanic Scholarship Fund, and the American Indian College Fund. 

To see what scholarships you may be eligible for, check out Scholarships.com, Fastweb, and the Department of Labor’s free scholarship search tool. 

Related: How To Get a Scholarship for College

4. Explore private student loans

For most people, it makes sense to borrow from a private lender after exhausting all federal student aid options. Private student loans don’t come with all the benefits that federal loans offer, but they can still help cover any gaps in your college funding. 

Private loans are available to undergraduate, graduate, and professional students, as well as parents helping a child cover school costs. Lenders typically consider your credit score and income to determine your eligibility for the loan and your interest rate. If your income is unreliable or you have a low credit score, you may need to bring on a cosigner to help get an affordable rate. 

It’s best to compare multiple lenders to find the best loan terms for your unique situation. You can review some popular options below. 

5. Consider a cheaper college

Keeping the costs of tuition down can make paying for school much easier. Usually this means enrolling in a state college or public institution, especially if you’re a resident of that state. Here's what you may want to consider: 

• In-state tuition: Many public institutions within a particular state (state schools) offer reduced tuition and fees to residents. You usually must meet specific requirements to be a resident, such as living locally for a minimum period of time before applying. 
• Public vs. private institutions: Public universities receive most of their funding from state governments and they typically charge less tuition than private institutions not funded by the government. 

Related: How To Get Into College for Free

6. Research alternative education paths

While many people assume attending a four-year college is the right path, it isn't always the best choice for everyone — especially if you’re concerned about how to pay for college. There are alternative options to consider that could greatly reduce your costs. 

For example, many overseas colleges charge lower tuition rates. In Germany, school is typically tuition-free even for international students, with semester fees usually coming in under €350 (although you’d have to buy health insurance and pay living expenses.) You also may need a visa and special testing to gain entry into a foreign university, but this can be a great option for those who want to travel and study. 

If you'd prefer to stay local, earning some credits at a community college can be very cost-effective and the credits can often transfer to a four-year institution. Full-time annual costs at community college programs can be under $5,000, and many students opt for a 2+2 program, where they complete their first two years at a low-cost community college before transferring their credits to earn a bachelor's degree at a four-year school. 

7. Plan a gap year to save 

If you don’t have enough money saved immediately after high school graduation, taking a gap year may be an option worth considering. Many students take a year off their studies to work and save money before starting college. You can earn valuable experience, take time to discover your areas of interest, and earn money to pay for your first year of school before getting started. 

If your biggest goal is to save money to pay for college, make sure to create a budget and set savings benchmarks to ensure you’re financially better off by the end of your gap year.

8. Take advantage of high school programs

Some high school programs allow you to earn college credits so you can attend school for a shorter period of time and pay less. Some of these programs can include:

• AP courses: Advanced Placement (AP) courses, are college-level courses that some schools offer to high school students. You can generally earn college credits by successfully completing these courses and their exams, and the credits transfer to many four-year institutions. 
• Dual enrollment programs: Dual enrollment programs allow high school students to register for college courses and earn both high school and college credits. Usually, the college courses are offered at little or no cost to students. 
• Early College Initiatives: Early College Initiatives allow students to earn credits toward a bachelor's degree or to earn an associate degree while attending high school. College-level coursework is provided to students, often at low cost or no cost within these programs.

It's best to discuss these options with your academic advisers to make sure the credits you earn will transfer to your chosen college. 

9. Work part-time during school

Working during school is another option for those figuring out how to pay for college. Work can be done outside of the federal work-study program, as many students can juggle their class schedules with part-time jobs. 

Remote jobs or jobs with flexible hours can be beneficial for students juggling coursework. It can also help to look for an employer that will help cover your tuition costs. Some employers that offer tuition assistance include Starbucks, Target, Disney, and Chipotle. 

10. Use cash from savings

If you have savings, using it to pay for school can be a great option since you won't have to pay it back, unlike student loans. When using savings, it's best to make a detailed budget to see how far the money will go and to get the most value out of it. Draft a budget that allocates the money to things like tuition, textbooks, and living expenses.