How to Pay for College

Going to college has a ton of benefits — it's fun, educational and can lead to a roughly $30,000 annual earnings premium for people who graduate with bachelor's degrees, government data shows. But it is also undeniably expensive.

Experts say it’s never too early to start thinking about college — where you want to attend, what you want to study and, of course, how you’re going to pay for it.

These questions often trouble people in their junior or senior years of high school, but experts say you can alleviate some of the dread by thinking about them sooner rather than later.

No matter where you and your family are in your higher education journey, it's smart to make a financial plan that combines your savings and current income with student loans and "free money" from grants and scholarships.

Don’t know where to start? Our guide covers 11 strategies to help you pay for college.

Table of contents:

• College savings plan
• Federal financial aid
• Grants and scholarships
• Cash from savings
• Work during school
• Private loans
• Choose a cheaper college
• Studying abroad
• Community college
• Gap year to save
• High school programs
• How to lower tuition and other extra costs
• Ways to save or earn additional money
• How to pay for college FAQs
• Bottom line: how to pay for college

College savings plan

If you’re a parent, relative or friend, you can set up savings accounts for a child’s higher education expenses. The earlier you start with these, the better. Here are some of the most common options for college savings plans to consider.

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).

These plans are typically sponsored by states, though you can open accounts in states you don't live in.

They 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.

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 for people under age 18. Coverdell savings grow tax-free, like 529s, and can be used for college as well as elementary and secondary education.

But contributions are not tax-deductible and are capped at $2,000 a year for each beneficiary, depending on your family’s income. The money generally has to be spent by the time the beneficiary is 30 years old.

Alternative accounts to save for college

Alternatives include accounts under the Uniform Gifts to Minors Act (abbreviated UGMA) and Uniform Transfers to Minors Act (UTMA). 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 reach a certain age, at which point the account is transferred to them.

Each type of account offers its own pros and cons, but in most cases, experts recommend 529 accounts over the other types for education savings. They offer possible state tax advantages as well as federal tax advantages, have higher contribution limits than Coverdell accounts and are counted more favorably under financial aid formulas than UGMAs.

Federal financial aid

The U.S. government may be willing to help you pay your college bills by providing federal financial aid. Undergraduate students need to complete the Free Application for Federal Student Aid (FAFSA) to receive a federal financial aid award, so be sure to do that as soon as possible.

The FAFSA typically opens on Oct. 1 each year. (Things are different for the 2024-2025 FAFSA, though, which won’t launch until December.)

You technically have a while to fill it out. For the 2022-2023 school year, the federal deadline is June 30, 2023; for the 2023-2024 school year, it’s June 30, 2024. 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.

To fill out the FAFSA, you'll need to gather your Social Security or Alien Registration Number, tax records, bank statements, investment records and documentation of untaxed income. You'll also need to create a Federal Student Aid account or FSA ID. Visit FAFSA.gov to get started.

Experts recommend that you fill out the FAFSA — even if you don’t think you’ll qualify for need-based aid — because many institutions also use the data from the FAFSA to make decisions about their own aid.

After you file your FAFSA, you’ll first get a Student Aid Report, which is an estimate of how much federal aid you may receive. Later on, after you’ve been accepted to a college, you'll receive an award letter that lays out grants and loans from the federal government, state and specific college you're looking at.

Grants and scholarships

Grants and scholarships are different from loans because you don’t need to pay them back, meaning there’s no need to worry about student loan payments. That’s why you will often hear these types of financial aid called “free money.”

The U.S. Department of Education runs the Pell Grant program, which gives money to students 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. That maximum Pell Grant will be bumped to $7,395 for the 2023-2024 year.

In addition to this federal assistance, each state provides additional financial aid.

Florida, for example, has the Bright Futures Scholarship Program. Washington has the Washington College Grant, which — depending on your family’s income — may cover full tuition costs at approved schools or career training programs.

Schools also often offer what's called merit aid to students with certain standardized test scores or other academic achievements. At private colleges especially, this is a significant form of financial aid, totaling billions of dollars a year.

Finally, you may want to take advantage of outside scholarships. Companies, nonprofits, foundations and other groups are constantly coming out with private scholarship opportunities that may offer free money with fewer strings attached than federal, state or institutional programs.

The biggest challenge is finding them. Check with your high school guidance counselor to see if they know of any local scholarships you should pursue. From there, use a scholarship search engine like Niche or Fastweb to identify other grants you might be eligible for. They may require some elbow grease. But writing an essay or filming a creative video, for example, is arguably easier than paying for college out of pocket.

Here’s a quick breakdown of common sources of funding:

• 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 own school district, for example, may run additional scholarship programs.

• 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.

• 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.

• 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.

Cash from savings

It could make sense for you to pull money from a traditional savings account to cover the costs of college. This strategy may drain some of your savings, but it could help you avoid having to take out loans for your college expenses.

Student loans typically have interest that may begin accruing while you’re in school. If you can avoid paying interest by using cash from your savings to pay your bills up front, then it will decrease your total costs in the long run.

Work during school

Working during school is another way some students pay for college. Consider participating in the federal work-study (FWS) program, which gives part-time jobs to students in financial need. Work-study jobs pay at least the federal minimum wage (currently $7.25 per hour) but can pay more.

Experts recommend you always answer "yes" when asked about your interest in 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.

One thing to keep in mind: Not everyone is guaranteed a work-study job, and you'll only be approved for a limited amount of wages. Your school’s financial aid office ultimately determines this based on the funding they received from the government and your FAFSA.

You can also look for other options for work while in school. For example, you could land a student research position in your subject area to gain academic experience while earning income. Or you could look at job listings to see which employers are hiring in your area.

Private 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. The income requirements for loan approval can also vary.

Additionally, private student loans aren’t eligible to receive the same benefits as federal loans.

Choose a cheaper college

If you can’t find a financial strategy that enables you to pay for your top-choice college, it may be time to look into alternative 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 — tend to be cheaper than fees for private schools — which rely on their students for revenue.

For the 2022-2023 academic year, the College Board reports that the average published tuition and fees in the U.S. were $10,950 for in-state public schools and $28,240 for out-of-state public schools. Private non-profit schools cost $39,400 on average. (All of those figures are for four-year institutions.)

Private, for-profit figures were not included, but those institutions typically charge even more. As you can see, different types of colleges come with drastically different price tags. The price will also vary considerably by state.

In Wyoming, for example, in-state tuition and fees at public four-year colleges cost an average of $6,440 per year; in Vermont, they cost $17,650 per year, College Board data from the same year shows.

There's also a difference between the listed price and what a student actually pays. A college's so-called "sticker price" is often a scary-large number that doesn't include financial aid. (Private colleges in particular end up discounting tuition, often by at least half, research shows.)

In order to figure out what you’ll actually pay, you'll want to look for a college's "net price," which you can find with the help of institution-specific calculators or general tools like MyinTuition.org. It's better to use tools to get a personalized net price, rather than just looking at an average net price.

And remember that you're not only on the hook for tuition and fees. The full cost of college also includes room, board, textbooks, transportation, health care... the list goes on.

Attend college abroad

In rare cases, it could be more affordable to study abroad instead of going to a college in the U.S. It’s no secret that universities are often more affordable elsewhere in the world. You may be able to find one that accepts American students at a significantly reduced tuition rate compared to what you would pay stateside.

For example, Germany is known for offering a tuition-free public university education to international students. You just have to be accepted to study at a university and prove that you can cover your living expenses to be approved for a student visa.

Studying abroad can be an incredibly enriching experience that helps you improve your language skills and broaden your horizons. However, you may need to speak a foreign language at a near-native level in order to qualify for admission to foreign universities, and some schools charge a higher average cost to international students. (Note that only some international schools participate in federal student loan programs. None participate in U.S. Education Department grant programs, so you won’t be able to use a Pell Grant.)

Plus, there are travel and moving costs to consider.

Community college

Community college can be a cost-effective alternative to a traditional four-year university because its tuition costs are often significantly lower.

Students can complete their first two years of schooling at a community college and then apply to transfer to a four-year university. This reduces the tuition costs for the first two years of your college degree. Your bachelor’s degree will look the same regardless of whether you complete all four years at a traditional college or start at a community college.

Community college can also be a way to bounce back from subpar academic performance in high school. If you have a strong GPA from your community college, it may help you qualify for admission to more selective universities when you’re ready to transfer.

Gap year to save

In some circumstances, it may make sense to take a year off from college to save money. For example, if you’re uninterested in community college but can’t afford the cost of a four-year school yet, you could work and save for a year until you have enough funds.

Some schools will grant you a deferral, which allows you to pause your studies for a year and retain your acceptance. Taking a gap year may also give you the chance to pursue passions, gain work experience or develop a better understanding of the type of work you would like to do when you eventually graduate from college.

High school programs

There are also high school programs that allow younger students to earn college credits before graduating. These programs can reduce the cost of college by decreasing the number of credits you need to take (and pay for) in order to earn your degree.

AP and CLEP tests

Advanced Placement (AP) courses and College Level Examination Program (CLEP) tests are two common ways to “test out” of college classes. 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 popular AP courses, according to the College Board, but rules vary by college and academic department.

About 2,900 colleges accept CLEP test scores, too, the College Board says. You must register to take these standardized tests, and depending on your scores, they may satisfy your college’s general education requirements.

CLEP is not as popular as the AP program, so be sure to check that your college accepts CLEP scores before you sign up to take an exam.

Earn college credits in high school

Dual enrollment is another popular way to potentially reduce college costs — and help you graduate 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.

Every state except New York and Pennsylvania has statewide dual enrollment programs. Even so, that doesn’t mean you can’t dual-enroll in those two states. You still can, but the program will likely be run by specific colleges.

Dual enrollment is often a cheaper alternative per credit hour than directly enrolling in a college after you graduate high school, and in many cases, it can be free. The price depends on many factors, though, and could be set by your state, your school district, or the college you’re dually enrolled in.

How to lower tuition and other extra costs

If you’re interested in lowering your tuition and associated enrollment expenses, applying your student’s extra cash to these costs will only get you so far. Here are a few additional strategies.

Compare different colleges and their plans

A good first step is to compare tuition and enrollment expenses across multiple colleges. Some will be much more affordable than others, which could impact where you choose to attend.

It’s also important to note that colleges may have different payment plans available. For example, one school may require a full tuition payment up front at the start of the academic year.; another may give you 12 months to pay off your tuition. This could be a meaningful distinction depending on how you pay for college.

Consider living off campus

You may also be able to save money at your top choice school by living off campus instead of in student housing. Student housing may come with extra payments and charges for things like meal plans that you don’t necessarily need to pay.

Some students may be able to reduce their living expenses by renting a room near campus and buying their own groceries. However, living off campus won’t always save you money, so it’s important to compare your expected costs to the price of student housing before making a decision.

Ways to save or earn additional money

If you can’t bring your college expenses down any further, the next step is figuring out how to save or earn additional money to cover your mandatory costs. Here are a few tips for paying for college with this strategy.

Increase your savings

You can begin by increasing your savings. That means starting as early as possible and choosing a type of savings account that matches your financial goals and offers a high APY (annual percentage yield).

If you want to save more money to pay for college, you can either reduce your expenses — by cutting back on things like eating out or travel — or bring in more money.

Consider getting a job in college

Working while pursuing a college education may be what it takes for you to afford your top-choice college. However, that can be difficult to do while balancing your class schedule, extracurricular activities and social life.

One option is to look for employment that allows you to work on your own schedule. You could be a food app delivery driver or find an online job that lets you set your own hours. Another option is to take advantage of online classes. These can be more flexible than in-person lectures because you are typically free to study at the hours that work for you instead of having to be physically present in class at a certain time.

If possible, maximize your current income

There may be ways to maximize your current income, as well. For example, if you’re trying to save for a child’s college expenses, you could negotiate a raise or ask for more responsibilities that might warrant a higher paycheck.

There’s also always the option of supplementing the work you do now with a second job. This is easier to do than ever, thanks to the abundance of online work-from-home opportunities, including finding freelancing jobs in your area of expertise and virtual positions.

Bottom line: How to pay for college

There are plenty of ways to pay for college. We cover 11 strategies above — including grants, scholarships, jobs and loans as well as several ways to reduce the cost of college to make it more affordable in the first place — but these methods might not all be applicable to your situation. The most important thing is to carve out some time to make a financial plan that works for you and your family.