You can reduce the amount of student loan money needed to finance college by following this order of operations for how to pay for college.
Going to college has a ton of benefits.
It is fun and educational and can lead to a roughly $30,000 annual earnings premium for people who graduate with bachelor’s degrees.
But it is also undeniably expensive.
Experts say it’s never too early to start thinking about the college where you want to attend, what you want to study, and, of course, how you’re going to pay for it.
Our guide covers strategies to help you pay for college.
How to Pay for College Without Loans
These questions often bear down on people in their junior or senior years of high school.
However, experts say you can alleviate some of the dread by thinking about these questions sooner rather than later.
1. Compare Different College Options
Not all colleges are created equal, especially when it comes to cost.
For example, in-state fees for public institutions which receive government funding are cheaper than fees for private schools, which rely on their students for revenue.
For the 2022-2023 academic year, the average annual total for in-state undergraduate tuition, fees, room, and board at public colleges was $22,690.
The total for public colleges for out-of-state students was $39,510. It was $51,690 at private nonprofit institutions. (All those figures are for four-year institutions.)
2. Consider Living off Campus
Living on campus can be a great experience.
It’s very convenient and you’ll be surrounded by your classmates and professors, but it is very pricey.
Aside from tuition, on-campus room and board can be a major college expense.
In some cases, it can even exceed the cost of tuition.
Once you’ve chosen a college, you’ll want to carefully weigh whether you want to live on or off campus.
Look over its dorm room as well as meal-plan estimates.
If these numbers aren’t readily available on your college’s website, try reaching out directly to the financial aid or housing offices.
3. Reduce your Number of Classes
One smart strategy to reduce your tuition is by reducing the number of credits you have to pay to earn your degree.
There are several ways to do so, and they vary by state and college.
Here’s a look at the most popular methods:
AP and CLEP Tests
Both are administered by the College Board.
If you did well on your high school AP exams, you may be able to send your scores to a college to be counted as credit toward your degree.
Most colleges will grant credit for the most popular AP courses, according to the College Board, but rules vary by college and academic department.
4. Earn College Credits in High School
Dual enrollment is another popular way to potentially reduce college costs, and it can help you graduate college faster.
Also known as concurrent enrollment or early college, these programs allow you to take college classes, usually at a nearby community college, while you’re still in high school.
Doing so allows you to earn high school credit and college credit at the same time.
By the time you graduate high school, you’ll have already knocked out some of your general education requirements for college.
5. Save Money with A 529 Plan
Saving up is one of the best ways to pay for college.
While you can save money using a regular savings account or taxable investment account, a 529 plan can help you gain a tax benefit as you set money aside for school.
The funds can eventually be used tax-free for qualified education expenses.
The longer you have to save up, the better off you’ll be.
Generally speaking, parents who started contributing to a 529 plan 10 years ago should have almost enough money in the account to pay for two years of college.
6. Apply for Scholarships
Scholarships are a form of financial aid because they generally don’t need to be repaid.
The internet has democratized families’ access to scholarships.
Depending on your situation, you might be able to qualify for unique awards you find online.
7. Apply for State Grants
While scholarships are usually merit-based, grants are typically awarded based on your financial need.
If your family income isn’t especially high, consider state grants for college. In Indiana, for example, there are grant programs available for:
1. Undergraduates with financial need
2. Adults returning to school
3. For attending trade schools
Like scholarships, grants are a form of gift aid that almost always doesn’t need to be repaid.
You should always prioritize this type of cash for college over other options, especially student loans.
8. Try Concurrent Enrollment
Some states allow students to earn college credit for classes taken during high school.
These classes are usually taught to a higher standard and credit is issued through a public university.
Depending on where you live, the credits earned in this manner can be transferred to state schools.
In states like Idaho, it’s possible to complete dual enrollment credits at a lower cost.
Other states, though, charge for credits.
However, you might be able to get a discount on credits if you’re a high school student working on your college degree.
9. Test out of Some of your Classes
Consider testing out of college classes. Students can reduce the number of classes they take in college with Advanced Placement (AP) test scores.
AP classes are taken during high school.
When you pass the test associated with the class, some schools will allow you to skip some general education courses, allowing you to get through college faster.
In addition to AP tests, you can also take advantage of the College Level Examination Program (CLEP) via the College Board website.
10. Consider a Less-Expensive School
Sometimes you can save money by skipping a private university and going to a four-year state school for your undergraduate degree.
Your scholarship money will go further to a public college than to a private school.
Plus, if you start at a community college, you’ll save even more money while completing your education.
Community college savings on tuition and fees aren’t the only perk.
Other benefits of attending a two-year school include flexible classes, personalized attention, and transfer agreements.
11. Cut Down on Secondary College Expenses
Whether you elect to attend a lower-cost school or not, choosing one closer to the home could decrease living costs.
Living off-campus could yield savings, and staying at your family home could reduce costs to near zero.
Aside from your living situation, look to trim college expenses like food, transportation, and supplies.
You could ditch the car in favor of public transportation, for example, or rent textbooks instead of buying them.
After running the calculations, you may still find yourself short of reaching your desired college’s net price.
And in that case, you might need to consider taking on student loan debt.
Experts recommend talking with your family and determining the maximum amount you feel comfortable borrowing.
Taking out loans to pay for college is extremely common and is not a de facto bad thing.
Yes, you should strive to graduate with as little student debt as possible, but approximately 45 million Americans have student loans.
1. Federal Student Loans
Because federal student loans are open to nearly all students and they come with better protections, experts universally agree you should take these first.
Federal loans are often referred to as “Direct” loans, as they come directly from the Department of Education in three different forms for undergraduate programs:
1. Direct unsubsidized loans
2. Also, with a direct subsidized loans
3. Direct PLUS loans for parents
2. Private Student Loans
After you’ve exhausted all of the options above, you may want to move on to private student loans.
This will require some shopping around.
When taking out private student loans, be careful, and do your research.
In addition to having higher interest rates and fewer repayment options, private loans often involve credit checks and application fees.
Additionally, private student loans aren’t eligible to receive the same benefits as federal loans, including the ongoing payment pause and any future federal student loan.
3. Parent PLUS loans
As their name suggests, Parent PLUS loans are geared toward the parent(s) of a student, and they’re becoming a fast-growing portion of federal student debt.
To get a PLUS loan, the borrower must meet the general federal student aid eligibility requirements mentioned above and be a biological or adoptive parent of the student.
Grandparents, unless they have adopted the student, aren’t eligible.
Unfortunately, PLUS loans don’t have the same repayment benefits as other federal student loans.
As soon as the loan is disbursed, the parent is expected to start making payments (unless they request a deferment).
How to Pay for College Without Financial Aid
Here’s our take on the ‘best’ order of operations to pay for college. It’s important to note that this is more like a “pie” than a strict order.
The more you can contribute from the “earlier” slices, the less you’ll have to borrow.
There are no “strict” rules here – but you should use free money before other funds.
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1. Fill out the FAFSA to Apply for Financial Aid
Once you’re applying to colleges, you’ll want to complete the Free Application for Federal Student Aid or FAFSA.
You can qualify for federal student aid if you’re a citizen or eligible noncitizen, have a Social Security number, possess a high school diploma, GED, or homeschool equivalent, and are enrolled in an eligible college program.
The FAFSA opens on Oct. 1 each year.
For the 2022-2023 school year, the federal deadline is June 30, 2023.
But you shouldn’t drag your feet. Some institutions and states have different deadlines and may award aid on a first-come, first-served basis.
Families and college students are advised to submit their FAFSA ASAP.
2. Look for Grants and Scholarships
Grants differ from loans in that they do not have to be paid back. That’s why you’ll often hear them called “free money.”
The federal government runs the Pell Grant program, which gives money to undergraduates from low-income families.
The specific amount you’ll receive depends on your expected family contribution and your cost of attendance.
For the 2022-2023 year, the maximum is $6,895.
Here’s a quick breakdown of common sources of funding:
1. High School Scholarships
If you’re a high-achieving high schooler or have an interesting personal background, a good place to start your scholarship search is through the National Society for High School Scholars (NSHSS).
Of course, check with your high school counselor, if you have one, for more localized options. Your school district, for example, may run additional scholarship programs.
2. Sports, Music, and STEM-Field Scholarships
If you excel in a particular area, such as sports, music, or a STEM-related field, you should look for related scholarships.
The more niche the scholarship, the less competition you will have.
These scholarships could come from various funds including local, national, public, or private sources.
If you’re interested in becoming a student-athlete, the college you’re applying to would likely be the main source of funding.
3. Local Clubs and Organizations
Depending on where you live, you could have some major sources of funding right in your backyard. Local membership organizations such as the Rotary Club provide all sorts of scholarships to residents.
4. State Grants
Above, we mentioned Florida’s Bright Futures Scholarship Program and another option from Washington state, but these are just two of hundreds of state-level programs.
To dive deeper, use the Education Department’s database, which compiles state-by-state information.
3. Ask about Tuition Reimbursement from your Employer
While it may have worked in decades past, a part-time job unfortunately no longer covers the costs of attending college.
But a good gig from the right employer can certainly put a meaningful dent in those expenses.
In recent years, tuition reimbursement has been gaining popularity at major employers all across the U.S. Target, Walmart, Disney, and Amazon, for example; now cover some or all of the costs at select universities for their workforce.
Many smaller employers also have reimbursement programs.
And even if they don’t, it doesn’t hurt to ask for tuition benefits — especially with the labor market being as tight as it is.
How to Pay for College with No Money
We’ve covered the basic funding options outside of student loans.
Before taking on student debt, try these additional ways to augment your finances and get those college costs down even lower.
1. Tap into Savings
As the saying goes, “the best defense is a good offense.” This applies to paying for college, too.
Parents, relatives, and friends have several ways to set up savings accounts for children’s higher education. The earlier you start, the better.
2. 529 Savings Plans
The most popular option is a 529 plan, formally referred to as a qualified tuition plan.
Not only do many 529s come with state tax benefits, but withdrawals are also tax-free if used for certain education expenses.
Qualified expenses include college tuition, fees, books, supplies, and equipment (like laptops).
Typically sponsored by states, 529s come in two varieties.
Prepaid tuition plans allow you to purchase future tuition at today’s rates. College savings plans are investment accounts that grow over time.
3. Coverdell Accounts
Another way to prepare for college costs is through a Coverdell education savings account, which is a trust or custodial account intended to cover certain school-related expenses.
Coverdell savings grow tax-free, like 529s, and can be used for college as well as elementary and secondary education.
But contributions are capped at $2,000 a year for each beneficiary until they’re 18. The money generally has to be spent by the time the beneficiary is 30 years old.
Alternative Accounts to Save for College
These are considered more flexible options than a 529 or Coverdell because the funds can be used for anything not only education expenses.
Adults hold assets for a minor until they turn a certain age, at which point the account is transferred to them.
Each type of account offers its pros and cons, but in most cases, experts recommend 529 accounts over the other types for education savings.
1. Consider Work-Study
When you’re filling out the FAFSA, you’ll have to answer a question about whether you want to be considered for the federal work-study (FWS) program, which gives part-time jobs to students in financial need.
Work-study jobs pay at least $7.25 per hour — the federal minimum wage — but can pay more.
Experts recommend you always answer yes when asked about work-study on the FAFSA.
You don’t have to take a work-study job that’s ultimately offered to you in your financial aid letter, so by answering yes, you’re simply keeping your options open.
2. Maximize Current Income
Even if you can’t get work-study, you can still find another job to make ends meet.
That vast majority of students do these days.
A 2020 study from the Education Department found that more than 80% of students worked at least part-time while attending college in 2018.
3. Land a Student Research Position
Another solid option to increase your income while beefing up your resume with work experience in your field of study is to become a student research assistant.
Many college departments offer these types of positions to students studying a relevant subject.
4. Score an Internship
Internships should first and foremost be about learning, according to the non-profit organization National Association of Colleges and Employers (NACE).
However, they can also make you a little money.
The organization found in an April 2021 survey that, on average, bachelor’s degree-seeking students with paid internships earned between $18 and $22 per hour depending on their year of study.
Not all internships pay that much, unfortunately.
And some don’t pay anything at all. According to NACE, about 40% of internships are still unpaid.
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How to Pay for College with Loans
Even without a scholarship, there are plenty of other forms of aid that can help you tackle the cost.
The financial aid system can be confusing, so don’t feel bad if you’re a little unclear about how it all works.
There are scholarships and grants (which you don’t have to pay back), and loans (which you do).
Some of what you receive is based on income and some can be based on academic merit.
Here are seven other ways to help pay for college:
Colleges, states, and the federal government give out grants, which don’t need to be repaid.
Most are awarded based on your financial need and determined by the income you reported on the Free Application for Federal Student Aid or FAFSA.
If you’ve received a grant, it should be listed on the financial aid award letter sent by the school.
This might have arrived with your acceptance letter, but sometimes it’s sent later.
Last year, undergrads at public colleges received an average of $5,000 in grant aid and those at private colleges received about $16,700, according to The College Board.
2. Ask the College for More Money
Yes, you can haggle over financial aid.
Experts suggest having the student write a formal appeal letter and then follow up with a phone call.
It’s worth reemphasizing why you’re a good fit for the school, and whether or not you received more aid from a comparable college.
Sometimes your family might have other expenses, like medical bills, that aren’t already taken into consideration.
4. Work-Study Jobs
These are part-time jobs on or nearby campus for eligible students, depending on their finances and the funding available at the school.
You need to have submitted the FAFSA to qualify.
Work-study jobs pay students directly, at least once a month.
Undergraduates earn hourly wages, but the amount they earn can’t exceed their work-study award for the year.
If you don’t qualify for work-study, it could be worth looking for another part-time job.
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5. Apply for Private Scholarships
There are thousands of private scholarships out there from companies, nonprofits, and community groups.
Ask your high school guidance counselor or use a free online service like Scholly that suggests scholarships you might be eligible for.
Companies called NextGenVest offer a free mentor who can also suggest scholarships, as well as help you understand your aid award.
6. Take out Loans
Loans should be your last resort, but they’re often inevitable if scholarships, grants, and savings don’t cover the entire bill.
The typical family uses loans to cover 20% of the cost of college.
You’ll want to borrow money from the federal government before turning to a private lender because federal loans offer lower interest rates and more borrower protections.
This is yet another reason to fill out the FAFSA. You won’t be able to get a federal student loan if you didn’t submit the form.
6. Claim a $2,500 Tax Credit
The American Opportunity Tax Credit allows you to reduce your taxes after paying for tuition, fees, books, and room and board — up to $2,500 a year per child.
Parents can claim the tax credit if their modified adjusted gross income is no more than $90,000, or $180,000 if filing jointly.
7. Live off-Campus or Enroll in Community College
If commuting to school and living at home is an option, it can save a lot of money.
The average cost for room and board is $10,440 at public colleges and $11,890 a year at private institutions.
That can be just as much as the cost of tuition at some schools.
If your finances are stretched thin, it might be worth exploring enrolling in a community college before transferring to a four-year school later.
Tuition and fees at the average community college cost $3,520 last year.
There are several ways to pay for college.
Frequently Asked Questions
This article highlights most strategies, although it does not apply to every student. if you find this content informative you can leave a comment in the comment section below.