For the 2021-2022 school year, the average cost of tuition and fees for a four-year private college is $38,070, $27,560 for a public four-year college (out-of-state) and $10,740 for a public four-year college (in-state), according to the College Board.
Add in the cost of room and board and other living expenses and it’s no surprise that students and their families often rely on a combination of funding sources to pay for their education. Students may turn to savings, scholarships, grants, and student loans to find enough money to pay for college.
11 Ways to Pay for College and Other Expenses
Paying for college, plus living expenses, often requires a hodgepodge of funding sources. As mentioned, students rely on things like scholarships, grants, in addition to student loans.
Students attending trade school or community college may also be able to use these sources of funding to pay for their education. Continue reading for details on different ways to pay for college.
1. Fill Out FAFSA and See What Aid You Qualify For
The Free Application for Federal Student Aid, better known as FAFSA®, is the application students will fill out if they are interested in securing any form of federal financial aid. This includes federal scholarships, grants, work-study, and loans. Many schools will also use information provided on the FAFSA to determine school-specific scholarships or grants.
Completing the FAFSA is free — it requires a bit of time, but that’s worth it if you qualify for much-needed funding to pay for schools.
Be sure to compare financial aid packages from each college to understand the net cost at each. Some colleges may have more expensive sticker prices, but offer more aid.
2. Applying for Scholarships
Many colleges and private organizations offer merit-based scholarships. This means money is awarded based on academic or athletic ability, not financial need. There are plenty of databases and scholarship search tools that can help students find scholarships.
Scholarships often have specific requirements, so read the criteria carefully. For instance, you might need to live in a certain state or major in a particular subject to qualify. If you’re unsure whether you qualify, contact the scholarship sponsor.
Recommended: What Is a Scholarship & How to Get One?
It may also benefit you to start researching scholarships early. Gather required documents and information to apply so that you are ready to meet any early deadlines. Many scholarships require you to submit a high school transcript, your standardized test scores, a financial aid form, and information about your family’s finances, including your parent’s tax returns from the previous year.
Many scholarships also require you to write an essay and provide at least one letter of recommendation. Be sure to follow all the directions carefully and to keep copies of your application.
3. Applying for Grants
Unlike scholarships, most grants are based on financial need, not academic achievement. The largest source of need-based grants is the federal government’s Pell Grant program, but there are other federal student grants available.
To qualify for a Pell Grant, you must be a U.S. citizen attending either a two- or four-year undergraduate program. If you have already earned a baccalaureate or professional degree, you won’t be eligible for a federal grant, so this link has four simple steps if you’re looking for ways to pay for graduate school.
Pell Grant amounts are based on financial need, the cost to attend your college, and your enrollment status. The amount awarded will vary based on those factors, but the current maximum award is $6,895 for the 2022-2023 school year.
Many states also distribute grants. Check out SoFi’s financial aid database with state-by-state guides.
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4. Asking the College for More Money
While it may seem like a bold move, one strategy for obtaining additional student aid might be asking the college to provide a larger financial aid package. Appealing a financial aid decision is a possibility, but there are no guarantees. Financial aid awards are usually based on information provided on the FAFSA, and in some cases changes in financial circumstances can lead to an amended financial aid award. Some colleges and universities might also be willing to match a more competitive financial aid offer from a comparable school.
The appeals process might vary based on the school’s policies, so check in with the financial aid office or review the school’s website to determine the exact process.
Many schools will require a letter of explanation. Depending on the circumstances, documentation might be necessary to supplement the information detailed in the appeals letter.
5. Getting a Part-Time Job
Another way to pay for college is to look for a part-time job, either on or off campus. Campus career services offices may also have resources for students looking for part-time work and may even help with resume writing.
Students looking for part-time jobs may want to consider the following types:
Student Research Positions
Bolster your resume while working as a lab assistant or teaching assistant. Some colleges and universities may have research positions available for undergraduate students.
Jobs with Tuition Reimbursement
Some companies may offer tuition reimbursement or support to part-time employees. This means you could earn money to boost your income and also gain some extra funding to pay for your tuition. For example, at Starbucks, part-time employees may qualify for the company’s education assistance program.
Applying for Internships
Internships can be a good way to help you gain work experience and round out your resume. While some internships are unpaid, if you can secure a paid internship it could allow you to earn some extra money and build skills directly applicable to your future career.
6. Applying for a Tax Credit
Qualifying students — or their parents, if the student is a dependent — may claim the American Opportunity Tax Credit (AOTC) for up to $2,500 for each eligible child attending college. To be eligible, the student must:
• be enrolled in a degree program at least half time for one academic period.
• have not finished the first four years of higher education at the beginning of the tax year.
• have not claimed the AOTC (or the former Hope credit) for more than four tax years.
• have not had a felony drug conviction at the end of the tax year.
Another tax credit, the Lifetime Learning Credit (LLC) , is also available for qualifying students, but cannot be claimed for the same student on an individual tax return. The maximum benefit of the LLC is $2,000 per tax return, and there is no limit on the number of tax years the credit can be claimed.
Requirements for either of these tax credits may change from year to year, so it’s recommended to check the most recent information before claiming the credit.
7. Federal Student Loans
The U.S. The Department of Education oversees the Federal Direct Loan Program which offers a few different types of student loans. Undergraduate students may qualify for subsidized or unsubsidized loans.
Subsidized loans are awarded based on financial need. The interest accrued on a subsidized loan is covered by the Department of Education while the borrower is enrolled at least half-time, during the grace period, and during periods of deferment.
Unsubsidized loans don’t have a financial need requirement, and borrowers are responsible for paying the interest on an unsubsidized loan once it’s disbursed.
Parents of undergraduate students or graduate students may also qualify for Direct PLUS Loans. Unlike other types of federal loans, a credit check is required for a Direct PLUS Loan.
Some students may have been awarded Federal Work-Study as part of their federal student financial aid package. This program is administered by individual colleges or universities, so check with the financial aid office to see if the school participates in the program.
If you are awarded work-study, you’ll still need to find a job that qualifies for the program. Many schools will run an on-campus job database for this sort of thing. Based on your financial aid award, you’ll be allowed to work a certain number of hours each week.
9. Private Student Loans
If you aren’t awarded a scholarship or grant and have exhausted your federal loan options, there are a variety of private student loans you can apply for to help pay for college.
Private loans are offered by banks, credit unions, and other financial institutions. They are not need-based or subsidized, and the lender will often review your credit score among other financial factors. In some cases, you may need to add a cosigner to your application to be approved.
Interest rates and terms vary from lender to lender, so compare loan options before committing.
10. Use Your Savings
If you’re lucky enough to have money saved away for college, put it to work! Some students may have a 529 savings plan set up in their name. A 529 savings plan is a dedicated college fund that offers certain tax advantages. Money contributed to the plan is invested and can be withdrawn tax-free if it is used for qualified education expenses.
Recommended: Guide to Paying for College for Parents
Using money saved up could help you take on less student loans or make it so you can work fewer hours at a part-time gig.
11. Income-Share Agreements
Income share agreements are made between a student and the school they attend. The college or university lends the student money required to pay for their educational costs, and in exchange the student agrees to pay a share of their future earnings for a fixed amount of time after graduation.
Unlike a student loan where the amount you repay is determined by the interest rate on the loan, the amount you repay for an income share agreement can fluctuate based on how much you earn after you graduate.
Income share agreements can be helpful for students who have exhausted their federal loan options. A potential negative is that students who are high-earners after graduation may end up repaying more than they would if they had borrowed a more traditional loan.
One place to start figuring out how to pay for college is by speaking with a guidance counselor and doing some research about financing college costs. Understanding the options available can help you and your family figure out what types of funding work best for your situation. Students can use a combination of funding — from student loans to grants and scholarships — to pay for their education.
No-fee private student loans from SoFi may be an option to help students pay for school after all federal student aid options have been exhausted. The application process can be completed easily online and you can see rates and terms in just a few minutes. Flexible repayment plans allow borrowers to select the option that best suits their budget.
Does anyone actually pay full price for college?
Some students pay the full sticker price for college. According to data from the National Center for Education Statistics, from 2009 to 2020, nearly 87% of first-time degree seeking students at four year universities received some form of financial aid.
Can you borrow from a 401(k) to pay for your child’s college?
It is possible to borrow a loan against your 401(k) to pay for your child’s college education. However, when you borrow against your 401(k), it can potentially limit growth in your retirement fund. There are also Parent PLUS Loans available from the federal government or private student loans for parents that could be considered to help pay for your child’s college education without requiring you to withdraw from or borrow against your 401(k). Consider speaking with a qualified financial professional for personalized advice.
Do student loans go away after 7 years or a set amount of time?
Repayment terms for federal student loans range from 10 to 25 years. Private student loan repayment terms may vary by lender.
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