Planning for college is an exciting time of life, but it can get stressful when you don’t have a clear plan or know your options for paying for college, including loans for undergraduate students.With some research and planning, you can make informed financial choices that benefit you and those supporting you.

Following the three steps below will help you understand different ways to pay for college, including types of financial aid, so the only thing you have to worry about is your classes – not your next tuition payment.

1. Start Saving What You Can

According to the Education Data Initiative, 30% of families have a dedicated college savings fund, which may include a 529 plan that’s tax deductible. However, they also found that 54% of parents don’t even know what the 529 plan is.

If you and your parents can save for college, it’s good to start early, so you understand how to pay for college or university in ways that benefit you most. Here are a couple of options:

• 529 savings plan: This is a popular way to pay for college because it offers tax-free earnings and withdrawals when the savings are used at eligible educational institutions. There may also be benefits when reporting income on the FAFSA form, and if it’s not spent, you or your parents may be able to roll the funds into a Roth IRA tax-free. The downside is you must spend funds on educational expenses or incur a 10% penalty on withdrawals used for other purposes. 
• Mutual funds: They give you or your parents the freedom to spend on whatever you want, and you can invest as much as you want. The downside is these funds are subject to taxes and count as income on your FAFSA form.
• Custodial accounts: These are transferred from an adult to a child when they turn 18, 21, or 25, depending on your state’s regulations. They offer the freedom to save and spend as you want but are subject to taxes. 

A few other ways to pay for college include savings from U.S. bonds, a Roth IRA, and a Coverdell Education Savings Account (ESA). 

1. Choose a School That Fits Your Budget

Deciding how to pay for college starts when choosing your school. Before you enroll, consider the school’s cost and experience. It may seem difficult to measure these factors, but it’s easier when you break it down into your overall return on investment (ROI). 

Here are five factors to consider when choosing a school:

• Cost: This can vary greatly, particularly when comparing public and private colleges. Private colleges are typically more expensive.
• Major: Consider how your chosen field of study will impact your future salary, and if it will provide the income to pay back loans efficiently. Use a college ROI calculator to estimate how much money you can expect to earn after graduation.
• Faculty: Good professors can help you network and potentially offer access to relevant internships and job opportunities.
• Location: Estimate your travel and living expenses for the area so you know what you can expect to spend.
• Experience: Think about what type of extracurriculars you plan on joining and what they may cost.

You can set yourself up for success by finding a balance between your academic interests and your finances, both now and after you graduate.

2. Get the Most Out of Financial Aid

Many people take out private student loans to help pay for college, but there are several other ways to pay for college, including financial aid. 

Your eligibility for federal financial aid is determined by filling out the FAFSA, which tells you how much you can receive in grants, student loans, and scholarships to pay for college. 

• Federal student loans are borrowed directly from the U.S. Department of Education at a lower fixed interest rate. Direct subsidized loans (based on need) for undergrads don’t have to be paid back until you graduate, leave school, or drop to part-time status. 
• Federal grants: There are several types of grants for students including the Pell Grant, Federal Supplemental Educational Opportunity Grant (FSEOG), and the Teacher Education Assistance for College and Higher Education (TEACH) Grant. Eligibility and annual awards vary depending on need and field of study. Under select circumstances (like withdrawing early), you may have to repay a grant. 

Your financial aid package is determined each year by you and your parent’s income and assets, and you will have to fill it out for each year you plan to attend college. 

4. Apply for Scholarships

Scholarships are a great way to pay for college because they don’t have to be paid back, making college more affordable for you and your parents or guardians. They may cover all college expenses or a portion, depending on the type of scholarship.

Scholarships can be:

• Offered by your educational institution or other organization.
• Awarded based on need or merit.
• For athletes.
• Specific to certain groups like women or people of color.

It’s important to start scholarship research early to meet application deadlines and eligibility requirements. You can find scholarships by:

• Contacting your school of choice.
• Searching online.
• Talking to your school counselor or advisor.
• Checking with nonprofits, community organizations, foundations, or religious organizations that align with your interests, beliefs, or field of study.
• Researching state and federal agencies.

As you find scholarships, confirm they are legitimate. Searching for financial aid and scholarships is free, and organizations should never ask for money when applying.

5. Ask About Work Study

College work-study programs allow you to earn money for school expenses by working a part-time job that’s typically on campus. You must fill out the FAFSA if you’re seeking a federal work-study program. If you’re eligible, you’ll be notified in your financial aid offer. If you don’t qualify for a work-study job through your FAFSA application, consider a part-time position either on or off campus to help pay for college. 

A part-time job or paid internship can help cover extra costs associated with college while adding to your resume. It’s also a great way to build relationships and network with others in your field. 

One potential downside to work-study programs is that your hours are capped, and wages are lower. You may also have limited job availability and more competition for work-study positions.

6. Use a Tuition Payment Plan

Tuition payment plans are a great way to pay for college over time instead of all at once. Through an agreement with your college or university, you can pay tuition-related expenses on a monthly, quarterly, or semester basis. Some plans may also cover room and board if you choose to live on campus, but they typically don’t cover textbooks, personal expenses, or off-campus housing. 

If you’re considering a tuition payment plan, it’s important to understand the details as some plans may have rules, fees, or penalties. Fees are typically more common if your payment plan goes beyond the academic school year. 

7. Choose the Right Private Lender

While your FAFSA financial aid package may include federal student loans and other support, you may still have a gap in funding for your desired school. Private student loans can help cover any shortfalls, but it’s important to compare multiple loan offers to ensure you find the solution that’s best for you and your family. 

As you explore private loans, look at the following details to find the one with the best benefits for your future:

• Interest, fees, and APR: The cost of your loan depends on the interest rate applied to your balance and fees charged by the lender. Knowing the APR helps compare the cost of both interest and fees. 
• Repayment options: Understand how long your loan lasts and when payments begin. 
• ACH benefits: Some lenders offer borrower perks if you enroll in automatic ACH payments. 
• Graduation benefits: Look for additional benefits, like cash back at graduation, that may be awarded by a lender when you graduate from your program.  
• Cosigner support: Some private student loans require you to get a loan with a cosigner, while others do not. Find a lender that matches your family’s decision on who is responsible for the loan. 
• Success services: Some lenders offer complimentary access to professional development training, resources, and coaching, like AscentUP.

Like choosing the right college, finding ways to pay for college involves multiple factors, including cost and borrower experience, so it’s important to do your research and make a choice that’s best for you!

Get the Ultimate Guide to Paying for College

As you find ways to pay for college, Ascent is here to serve as a resource for building a strong financial foundation. 

From scholarship opportunities to FAFSA advice, you’ll find everything you need to take the stress out of paying for college in our Ultimate Guide to Paying for College. Being informed on how to make responsible financial decisions can help you pursue your goals and attend your dream school.

FAQ

What are some other ways you can pay for college?

In addition to federal financial aid, student loans, and work-study programs, there are other options for paying for college. These include employer tuition assistance, 529 savings plans, and education tax credits.

At what age does your parents’ income not matter for college?

You are considered a dependent student on the FAFSA form if you are under 24 years old. These are special circumstances when you may be considered independent under 24:

• You are married.
• You have dependents.
• You are an active-duty US Armed Forces member or a veteran.
• You are working toward an advanced degree (master’s or doctorate) the same year you’re seeking financial aid. 
• You have a legal guardian who isn’t a parent or step-parent, or you are emancipated
• You are unhoused or at risk of being unhoused.

Can I get a Pell Grant without my parents?

Federal Pell Grants are ways to pay for college and are typically awarded to undergraduates who need more financial assistance. You can apply for the Pell Grant without your parents’ information, but only if considered an independent student per the FAFSA criteria. If you are incarcerated and part of an approved Prison Education Program, you may qualify for the Federal Pell Grant.