Paying for college is one of the first and biggest steps in the journey to higher education. With annual fees coming in at around $10,000 for public schools and over $38,000 for private institutions, going to college is expensive, and paying for college tuition can be a laborious and stressful process. That said, there are different routes and tips we can give you when it comes to paying for college tuition, and it pays to review all of them to see which ones are best for you and which ones you can benefit from in the most effective way.
This article takes you through the top twelve ways to pay for college tuition, and how you can go about exploring these options.
1. Student aid
Student Aid in the US comes in many forms. The Free Application for Federal Student Aid (FAFSA) should be one of the first things you do when you have been accepted to college. The FAFSA provides applicants with a Student Aid Report (SAR) that outlines what support you can expect to receive based on your circumstances, the cost of your college, and the family support available (if any).
Support can include scholarships, loans, grants or earned financial relief through work experience. The rationale to apply early (and some colleges mandate this) is that the amount of money institutions and states can provide reduces the longer the FAFSA process is open.
2. Applying for a grant
There are several grants available to students, some of which will be recommended as part of their FAFSA, none of which need to be repaid. The application process will be detailed upon receipt of the SAR.
These grants, administered by the US Federal Government, are one of the most common grants available and cover your costs for tuition. They are available for undergraduate students who have exceptional financial need and do not yet have a degree.
Federal Supplemental Educational Opportunity Grants
Similar to a Pell Grant, FSEOGs are awarded to students under extreme financial hardship. These are administered directly by participating colleges, but not all will opt in for the FSEOG program.
Iraq and Afghanistan Service Grants
These grants are awarded if your parent or guardian was a member of the U.S. armed forces and died as a result of military service performed in Iraq or Afghanistan after the events of 9/11, and if you were under 24-years old at the time of the death. This grant is open to those that are ineligible for the Pell Grant based on family financial contribution.
Teacher Education Assistance for College and Higher Education Grants
TEACH grants are paid to those students who are preparing for a career in teaching. To qualify for the grant, you must agree to complete teacher training and serve as a teacher for four school years. If you don’t do this, the grant is converted into a loan that must be repaid.
3. 529 College Savings Plan
The 529 College Savings Plan is a way for parents to leverage their savings to support their children’s college fees. This plan allows for tax-free savings growth as long as the funds are used for educational expenses.
4. Employer scholarships
Many employers and other organizations offer scholarships for prospective students or existing employees who wish to carry on studying. These scholarships offer a set amount in contribution to college expenses. The amounts are often quite generous and, in some cases, might cover the entire cost of tuition. These scholarships are often affiliated between one employer and one college, and, due to the limited number of places, are extremely competitive. Earning a place on these scholarships comes with a lot of preparation, such as good grades at school, a high degree of competence (if you are working for the organization), and a comprehensive application and interview process.
5. Local scholarships
Local scholarships are offered by smaller (local) businesses or organizations, as well as charities, non-profits, and even places of worship. These scholarships are usually less lucrative than national or institutional ones, but they provide a welcome additional way for students to part-fund college. It’s worth researching your local area to see what is on offer.
6. Part-time work
One of the easiest ways to pay for college is to work in part-time jobs. Many jobs are perfect for college students because of their flexibility and ease of entry for those who don’t yet have formal qualifications. Popular options for part-time work can include retail work, hospitality, administrative jobs, carer work, setting up your own business or freelancing, and entry-level work specializing in the field that you wish to end up working in (career guidance teams and career fairs can support here). Whatever you decide to do, ensure that you leave enough time for studying and coursework!
7. Employer tuition assistance
Connected to part-time work, some employers offer tuition reimbursement that allows them to contribute towards their employees’ tuition costs. It is currently estimated that 92% of employers in the US offer this benefit in some form. As an added benefit, employees do not have to declare this assistance on their income taxes.
8. Tax credits
Tax credits come in two forms in the US, but both are designed to allow people to claim back educational costs from their tax payments. The American Opportunity Tax Credit (AOTC) is available for the first four years of higher education and is worth up to $2,500 annually. The Lifetime Learning Credit (LLC) is not limited to four years. It covers any post-secondary education and can be claimed once per tax return, for a maximum of $2,000 each time. As with any tax rebate, ensure you are eligible for AOTC or LLC before you claim, to avoid tax return complications further down the road.
9. Student loans
Federal student loans might be recommended as part of your SAR and will offer a much lower interest rate than standard financial loans. Because of this, it is best to try to avail student loans before any other type of loan, to do as much as you can to limit how much you are paying back once you graduate. Despite the relative ease of repayment, you should only borrow what you need as you will need to pay off these loans after you graduate, and the debt isn’t written off after a set period of time like it is in some other countries. The maximum you can borrow each year is $12,500.
10. GI bill
The GI Bill is designed to support veterans in getting into full-time education. Passed through US Congress in 1944 to support soldiers (“GIs”) returning after the Second World War, the original GI Bill has evolved into the “Post 9/11 GI Bill” that pays tuition fees and the cost of textbooks, discounted rates on these provisions, and foreign exchange programs. Unused GI Bill benefits can also be transferred to your spouse or other dependents.
11. Take out a loan
Federal student loans remain the best options for students needing to borrow money to pay for college, but private student loans are an alternative if federal loans cannot be availed. These are typically split into co-signed and non-co-signed options.
Co-sign student loans
Co-sign loans are private student loans that require borrowers to provide a co-signer, sometimes referred to as a guarantor. Co-signers typically must have a good credit rating and are under the same obligations to repay the loan as the borrower. Co-signers will be called upon to make loan repayments if the borrower cannot do so; non-repayment will therefore affect both parties’ credit ratings. Because of the additional level of security from the lender’s point of view, co-signed student loans normally offer a lower interest rate than non-co-signed options.
Non-co-sign loan options
Federal student loans don’t require a co-signer, but there are other options for you if you are unable to provide one. Many financial services providers offer credit-based student loans. These will usually have higher interest rates than co-signed loans. There are a few non-co-sign loan options out there, so just look around and see what’s available.
12. Regional tuition exchange programs
Some educational institutions offer reduced rates for those students who are studying from a different state (referred to as “out of state” students). These programs are offered only by certain institutions in certain states, and as such, the FAFSA is not required. Regional tuition exchange programs vary significantly from place to place and sometimes the discount is significant, and in other situations, it’s only marginal. It is therefore prudent for you to do your own research on these programs and see if they might be of benefit to you.
We have discovered that despite the high cost of college education, there are plenty of options available for college students. If you are planning to attend college but not sure where to start in terms of paying for it, then the main points to consider are:
- Complete your FAFSA as a priority.
- Check if you are eligible for a Federal Student Loan.
- Look into scholarships.
- Look into grants.
- See what your employer can do to help (either through simply offering you work, or through tuition support.
Whatever you decide to do, it’s good to get your financing strategy in place as soon as you can after getting accepted into college, so you can fully focus on your college years, having fun as well getting on with the serious task of learning.
Are you concerned about college tuition? Did you find this useful? If so, share it with your friends. You never know who might find it helpful!
Originally published on July 6, 2019.