Complete Guide to Paying for College: Strategies & Tips

Young man with glasses sitting at a table holding books in one hand and a piggy bank in the other.

Complete Guide to Paying for College: Strategies & Tips

Published March 11, 2024

Young man with glasses sitting at a table holding books in one hand and a piggy bank in the other.

Many families use student loans as the primary way to pay for college. Fortunately, students have various funding options that don’t require taking out loans. To help, we explore funding and financial aid options, strategies to help you prepare for paying for college, and tips to manage loan repayments post-college.

Understanding the Costs of College

The costs of college vary depending on what school you attend, whether you’re living on campus or at home, your major, and living expenses. While college costs can add up, about 84% of students receive financial aid to help offset the expenses. 

Understanding the various costs involved can help you plan how to pay for college. Additionally, you can contact your college’s free financial counseling services to discuss additional options to help you save. 

Here are the main college costs you’ll need to cover.

College Tuition and Fees

College tuition covers the costs of your classes and course instruction. Universities may charge one tuition rate or charge per credit hour. Tuition is typically the most expensive college cost and can be a primary factor in determining whether a college is affordable. 

Tuition costs vary per school, program, and location. For instance, public colleges often reduce the tuition for state residents, and private colleges usually have higher tuition than public universities. Some programs can be more expensive than others to offset specialized equipment costs and accreditation requirements. 

In addition to tuition, you’ll also have college fees that pay for services, operational costs, and facilities. The specific fees and price varies per university. Some typical fees include:

  • Lab fees
  • Technology fees
  • Student activity fees
  • Library fees
  • Registration fees

Understanding college tuition and fees can help you anticipate costs and plan how to pay for college.

College Room and Board

Students typically can live on or off campus, although some colleges may require first-year students to live on campus.

Students who live on campus will have to pay for room and board, which includes the costs of housing and meals provided by the college. 

On-campus housing costs and living options vary based on the school. For instance, students living on campus at a public four-year college pay an average of $11,520 per year, while students at private universities pay an average of $13,028 per year. They may be able to choose to have a roommate or have their own room, though this can affect the costs. Colleges also typically offer different meal plans at different prices.

Students living off campus will need to find and pay for housing themselves, not to the college. Some students share apartments or townhomes with other students to reduce costs, or they may live with their families. Many colleges allow off-campus students to buy a meal plan; otherwise, students are responsible for their meals. 

Books and Supplies

Students must also pay for textbooks, course materials, and other educational supplies. The overall costs of books and supplies can vary based on the program of study. For instance, pre-med majors often have to pay more than psychology majors. 

But there are ways to save, especially on textbooks. You can:

  • Rent eTextbooks instead of buying
  • Purchased used textbooks
  • Sell textbooks after you no longer need them
  • Apply for book scholarships

Personal and Miscellaneous Expenses

You’ll also want to plan for miscellaneous and personal expenses, such as transportation, emergency funds, and daily living expenses, like detergent and clothing.  

These costs will vary depending on the college, location, living situation, and the individual. For instance, students may be able to use the university’s transportation system, but commuters may need a vehicle. 

Preparing a College Payment Plan

Before researching and applying to colleges, you’ll want to assess your finances and determine your college budget to identify what is affordable versus what you are willing to pay. This step will help families avoid overspending on their student’s college education and ensure they apply to schools that fit their budget.

Assessing Your Financial Situation

Taking steps to assess the family’s financial fitness before applying to college helps everyone identify how much they can reasonably pay for college and what financial options are available. When evaluating your financial situation, you’ll want to consider savings, income, and potential family contributions.

You’ll want to:

  • Clarify how much money is available through 529 savings and other funding sources you set aside to pay for college, like savings or investments.
  • Identify any money other family members and the student plan to contribute.
  • Estimate the costs for a few schools to get a sense of how much college will cost. Net price calculators, often available on college websites, can help you estimate the actual cost of attending.
  • Use the free federal student aid estimator tool to understand how much federal student aid your student may be eligible for.
  • Subtract the money set aside to pay for college from the estimated cost of attending college to understand how much additional money you’ll need to pay for college through financial aid or loans. 

Understanding your financial situation and how much additional funding you’ll need can help you better understand what types of colleges to apply to and what financial aid sources you want to use. You may also want to discuss the amount they’d be comfortable taking out in student loans if needed. 

Discussing these scenarios in advance can help students and parents reduce the risk of accepting an offer from a school only to realize the cost is more than they’d like to manage.

Creating a College Budget

Families will need to determine a realistic college budget, but this process doesn’t have to be complicated. Parents and students talking openly will help ensure everyone understands what costs are priorities and the financial limits. 

This initial budget can explore the estimated total costs for the duration of the student’s degree, whether a four-year or two-year program. This will ensure the student clearly understands how much the degree will cost and how much financial aid they’ll need to fill in the gaps.

Here are tips to help you create a budget for the full cost of undergraduate education.

  • Total all the expenses you identified for a year of college, including tuition, room and board, books, and personal expenses. Then, multiply that amount by the number of years it will take to complete the program to estimate the total cost.
  • When calculating the total cost, consider accounting for the potential cost increase each year since tuition often increases annually.
  • Subtract the amount the student and parents are contributing to pay for college from the total to see how much additional funding you’ll likely need to pay for the degree.
  • Start exploring possible scholarships and funding sources that the student won’t have to pay back to see how much of the additional funding you’ll likely be able to cover.

At this point, you’re likely dealing with estimates. Still, this step helps the student realistically look at what colleges will fit their budget and the importance of finding additional funding sources to help avoid or minimize the need for student loans.

Exploring Financial Aid Options

Finding financial aid options can sometimes feel overwhelming and exhausting. However, if they fully explore their options, families can potentially save tens of thousands of dollars in college costs. 

Before looking at loans, you’ll want to exhaust all financial aid options that don’t require you to pay the money back, like scholarships, grants, or money through work-study programs. The key is to start researching early so you have time to gather the information needed and meet the deadlines.

There are essentially two types of aid — need-based and merit-based. Federal need-based student aid, like the Pell Grant, is an excellent place to look first for options and see if you qualify. 

You can find merit-based aid through colleges, institutions, or private organizations. Merit aid is based on academic or athletic ability or a specific talent — not on financial need. 

Merit Scholarships and Grants

A variety of scholarships and grants are available, including ones based on merit, interests, and personal backgrounds like ethnicity or gender. Merit scholarships are offered through universities, colleges, corporations, and organizations. 

For many of these, you don’t need to be a straight-A student to get the scholarship. Some are based on activities like community service. Students who take the PSAT in their junior year of high school may be eligible for a National Merit Scholarship. 

Some additional ways to find scholarships and grants include:

  • Using a college comparison tool like Road2College’s R2C Insights, which includes a free trial.
  • Contacting the financial aid office at the college you plan to attend
  • Talking to your student’s high school counselor
  • Online searches and tools, like the U.S. Department of Labor’s free scholarship search tool
  • Your state’s grant agency
  • Contacting professional organizations related to your student’s field of interest
  • Ethnic-based organizations
  • National organizations or clubs your student may belong to
  • Civic groups, local businesses, and foundations 

Federal and State Aid

FAFSA, or the Free Application for Federal Student Aid, is an essential form for students seeking financial aid for college. This form gathers information on your student’s and family’s finances to help determine eligibility for scholarships, grants, and loans. 

We recommend all students complete a FAFSA because it acts as a gateway for many different aid types, including:

  • Federal grants such as the Pell Grant
  • State scholarships
  • Federal work-study programs
  • Need-based aid
  • Some merit scholarships from colleges  

Work-Study Programs

Work-study programs provide a way for students to earn money to pay for college through an on-campus or off-campus job. These jobs are considered financial aid, so you must complete the FAFSA to qualify.

Students eligible for work-study will need to apply for opportunities available on campus. Students who get a work-study job are paid to work a set number of hours.

While work-study programs are jobs, they typically are more flexible and take the student’s schedules into account, unlike an outside job. Additionally, the income from a work-study job doesn’t count against future financial aid since it is a form of financial assistance. 

Taking Out Student Loans

Higher education can be expensive, even when getting financial aid. In fact, 64% of students pursuing a bachelor’s degree from a public four-year college have student loan debt. 

However, it’s best if students aren’t overburdened with student loans when they leave college. Before taking out a student loan, students and families should consider the cost, how the repayment works, the consequences if they can’t make payments, and how they may impact their future finances and goals.

It’s important to carefully research student loan options to find the best fit for you. Additionally, remember that students don’t have to accept the full amount offered.     

Federal Student Loans vs. Private Student Loans

Federal student loans are from the government, while private student loans are through banks, credit unions, and other lenders. Your student should carefully research their options because different loans come with different interest rates, repayment terms, etc.

Students should consider federal student loans before pursuing private student loans because federal loans typically are cheaper, have protections, and better repayment terms. However, some students may consider a private loan if they qualify for a low interest rate and know they can repay it quickly.

When deciding between federal and private loans, you’ll want to consider your financial situation and the pros and cons of each loan type. For instance, federal student loans may allow for student loan forgiveness programs and income-driven repayment plans and have few to no credit requirements. However, some drawbacks to federal student loans include upfront fees, loan limits, and the inability to choose your loan servicer.

Some advantages of private student loans include a higher loan limit, lower interest rates, no upfront fees, and more flexible loan terms. However, some drawbacks include no protections like federal student loans, potentially needing a co-signer, high interest rates if you have no credit history, and having to search for loans yourself.

Understanding Loan Terms and Conditions

Student loan terms and conditions vary significantly between federal and private options. Therefore, it’s important to fully understand the terms before signing up.

Some key terms to understand include:

  • Interest rate: the cost of borrowing money, usually given as a percentage. The interest rate can be fixed (stays the same over the life of the loan) or variable (the percentage can change over time). Congress sets federal loan interest rates.
  • How interest accrues: The loan’s promissory note will state if the interest accrues daily or monthly. 
  • Repayment plan: the terms for how much you’ll pay monthly and for how long. Federal student loans provide various repayment plan options, like graduated repayment, extended payment, and more.
  • Repayment period: the length of time to repay the loan.
  • Grace period: the amount of time after you graduate or leave school when you are not required to make payments. Federal loans usually offer grace periods, while private loans may or may not.
  • Default: not making payments for a set period. Defaulting can negatively impact your credit score or result in legal action.

Managing Loan Repayment

When it’s time to start repaying the loans, your student may have options to help manage the loan repayment, including:

  • Looking for student loan assistance programs through their employer
  • Exploring federal student loan forgiveness programs
  • Pursuing income-driven payment plans if your federal student loan payments are high compared to your income
  • Exploring career or military programs that assist with managing student loans, such as programs for active-duty military personnel, doctors, nurses, and teachers
  • Reducing the interest rate by signing up for autopay
  • Refinance or consolidate loans, although refinancing federal loans may make you ineligible for some protections, so evaluate this option carefully

Additionally, students will want to make payments on time and maintain a good credit report and score.

Alternative Financing and Saving Strategies

It is possible to pay for college without loans, but it can take additional planning and creative strategies to make it work. The steps you take to plan and budget before applying to colleges will help, along with choosing a college that fits your budget. But, some other options and programs can further reduce out-of-pocket costs.

Here are some creative ways to pay for college that don’t involve student loans.

Saving on College Costs

One option to save your student money is to complete their general education credits at a community college before starting a four-year university. This also allows them to live at home, which can provide further savings. It also can be a good option for students who aren’t sure what degree they want to pursue. However, confirm that credits will transfer to the college you want to attend. 

Students can save on textbook costs by renting or buying used books from sites like Amazon Textbook Rentals or AbeBooks. They can also sell unwanted textbooks after the semester ends to recover some of the cost.

Income-Share Agreements

Income-share agreements (ISA) are a type of student loan. But unlike traditional loans, you repay the money based on your future salary. Essentially, you receive funding for your education in exchange for promising to repay a fixed percentage of your income for a specific amount of time after completing school. As a result, you may end up paying back more or less than you received. 

As with any loan, it’s important to understand the agreement’s terms and conditions. For instance, the income share percentage, or the amount of your gross income you’ll pay each month, typically can vary from 2% to 10%. The repayment terms can also range from 2 to 10 years or more. These loans are not credit-based. 

ISA may work for some students, but it will depend on your situation and the ISA terms.

529 Plan Education Savings Accounts

A 529 college savings plan is a tax-advantaged investment account specifically for education savings. The plans function similarly to a Roth 401(k) or Roth IRA. 

An advantage of these accounts is that your earnings accumulate tax-free, and you don’t have to pay federal income tax on withdrawals if the money is used for qualified education expenses. Withdrawals may also be exempt from state income taxes, but you should check where you live.


Crowdfunding allows you to raise money through donations. While this approach may seem unusual, platforms like It Takes A Village provide a place for students to raise money to help fund their education. Students must submit an education campaign, which lets potential donors understand their situation, why they need assistance, and how much funding they need. 

Navigating the College Payment Process

The college payment process can vary per school, so it’s important to familiarize yourself with your college’s process and policies. You’ll want to pay on time because otherwise, you could incur late fees, be unable to register for classes, and more. 

Most colleges and universities provide information on the school’s website regarding their payment process.

Billing and Payment Deadlines

College tuition bills are time-sensitive and usually arrive before the semester starts. Some colleges may send an e-bill instead of a paper statement, so check your email.

College tuition bills are usually for the upcoming semester. So, if you’re taking classes in the fall and spring semesters, you’ll receive a bill before the fall semester and one before the spring semester. 

It’s important to pay your bill on time. The consequences of paying late vary per school but can include incurring fees and being unable to register for classes, receive transcripts, or receive diplomas. Often, late fees are charged monthly—not once a semester.  

Most schools provide a calendar with the dates and deadlines for paying tuition, fees, and other charges. If you have questions or problems, you should contact the school’s student finance office.

Tax Benefits for Education

Tax credits and deductions can help offset higher education and supplies expenses. 

Students who have yet to complete the first four years of college may be eligible for the American Opportunity Tax Credit (AOTC). AOTC provides up to $2,500 in credit for the first four years of postsecondary education. 

Eligible expenses include tuition and fees, books, and supplies required for enrollment. To claim the credit, you must receive a Form 1098-T Tuition Statement from the school. Then, you complete Form 8863 and attach it to your taxes.

Planning for the Future: Post-College Money Management

Establishing a plan for money management after graduating from college can help students create a clear plan for repaying loans and managing post-school financial obligations without going into debt.

Students can also begin to identify strategies to help them start saving for future expenses, setting aside money for retirement, and focusing on establishing a good credit score.

Loan Repayment Strategies

Students who have taken out loans will want to find solutions to help them pay off their loans quickly. Paying off your student loan quickly can reduce the amount of interest you accrue, making the debt easier to manage.

It’s important to understand how the interest accrues on the student loan. Subsidized loans will not accrue interest during deferment periods, while in school at least half-time, or during the grace period. However, the interest on unsubsidized loans accumulates even when you don’t have to make payments, like deferment or forbearance. 

Additionally, unsubsidized loans may also be capitalized, meaning that your interest will be added to the principal amount of your loan. This typically only happens once when you enter your repayment period. After that, the interest accrues on your total balance.  

If you have an unsubsidized loan, the interest can add up fast, making it harder to repay the debt. Some student loan repayment factors and strategies to consider to help you pay back the debt fast include:

  • If allowed while in school, pay something toward the loans because the payments will be credited toward the debt. This can cut down on the interest.
  • Commit to consistently paying the loan in full to stay on track with your repayment schedule.
  • Avoid forbearance or pausing payments unless necessary, such as in an emergency or unexpected financial hardship.

Budgeting After College

While college students must learn some money management skills, budgeting after college can still be surprising — especially when you realize how quickly the money from paychecks gets used for basic living expenses.

Here are some tips to help students manage their finances and save after graduation:

  • Set aside specific monthly income amounts to cover necessities, wants, and savings. 
  • Start retirement savings by opening a Roth IRA or 401(k).
  • Consider opening a high-yield savings account that allows you to generate money based on the amount of funds in the account.
  • Focus on establishing or maintaining a good credit score, which will help you when you need to qualify for an auto loan or mortgage later in life. 

FAQs: Paying for College

Here, we address common questions and concerns students and parents have about financing a college education. This section aims to provide clear, concise answers to help readers navigate the complexities of paying for college.

How can I estimate the total cost of attending college?

To estimate the total cost of attending college, consider tuition and fees, room and board, books and supplies, transportation, and personal expenses. Many colleges provide a “net price calculator” on their website, which offers a personalized estimate of the total cost after financial aid is considered.

What is the difference between scholarships and grants?

Scholarships and grants are both types of financial aid that do not need to be repaid. Scholarships are usually merit-based, awarded for academic or extracurricular achievements, while grants are typically need-based, given to students with financial need.

How do I apply for federal student aid?

To apply for federal student aid, complete the Free Application for Federal Student Aid (FAFSA) online at The FAFSA determines your eligibility for federal grants, work-study, loans, and some state and college-specific aid.

Are there advantages to federal student loans over private loans?

Yes, federal student loans often offer lower interest rates, more flexible repayment plans, and options for deferment, forbearance, and loan forgiveness compared to private loans. They do not require credit checks or co-signers for most student borrowers.

How can I minimize student loan debt?

To minimize student loan debt, first explore all sources of “free” financial aid, such as scholarships and grants. Then, consider attending a less expensive school, such as a community college, for the first two years and working part-time to reduce the amount you need to borrow.

What should I do if I can’t afford my loan payments after graduation?

If you’re struggling to afford your loan payments, explore options such as income-driven repayment plans for federal loans, which adjust your monthly payments based on your income. Also, deferment or forbearance should be considered as short-term solutions. Contact your loan servicer as soon as possible to discuss your options.

Can I get my student loans forgiven?

There are several loan forgiveness programs for federal student loans, including Public Service Loan Forgiveness (PSLF) for those working in public service jobs and Teacher Loan Forgiveness for teachers working in low-income schools. The requirements vary by program, so it’s important to research and understand the eligibility criteria.

How does work-study operate?

Federal work-study provides part-time jobs for undergraduate and graduate students with financial need, allowing them to earn money to help pay education expenses. Jobs are related to the student’s course of study or community service and are typically on-campus, though there are some off-campus opportunities.

Are there tax benefits for college students?

Yes, several tax credits and deductions are available to help offset the cost of college, such as the American Opportunity Tax Credit and the Lifetime Learning Credit. These benefits can reduce the tax you owe and, in some cases, increase your refund.

How early should I start planning for college expenses?

It’s never too early to start planning for college expenses. Start saving as soon as possible, ideally through a 529 college savings plan or another education savings account. Early planning gives you more time to research scholarships, grants, and other funding sources, reducing reliance on student loans.

How can I appeal for more financial aid if my initial award isn’t enough?

If your financial circumstances have changed or if you believe your initial financial aid award isn’t sufficient, you can appeal to your college’s financial aid office. Provide documentation of your financial situation and any specific circumstances to support your request. It’s also helpful to include offers from other schools as leverage, if applicable.

Are there specific scholarships for students in certain majors?

Yes, many scholarships target students pursuing specific majors or career paths. These scholarships are often offered by industry associations, companies, and foundations that seek to support students in fields related to their interest or business. Research and apply for scholarships that align with your chosen major or career goals.

Can part-time students qualify for financial aid?

Part-time students can qualify for financial aid, but the amount may be reduced compared to what full-time students receive. Eligibility for specific types of aid, such as certain grants and work-study programs, may vary based on enrollment status. Always check with the financial aid office for specific criteria.

What are the best practices for using student loans wisely?

To use student loans wisely, only borrow what you need, understand the terms and conditions of your loans, choose the right repayment plan, and make payments on time. Consider paying interest while in school to prevent it from capitalizing and increasing the total amount owed.

How does transferring schools affect my financial aid?

Transferring schools can affect your financial aid since each institution has its own cost of attendance and financial aid policies. You’ll need to complete a new FAFSA and any required financial aid documents for the new school. Additionally, some scholarships or grants may not transfer, so it’s important to check with both your current and future schools’ financial aid offices.


Use R2C Insights to help find merit aid and schools that fit the criteria most important to your student. You’ll not only save precious time, but your student will avoid the heartache of applying to schools they aren’t likely to get into or can’t afford to attend.  

Other Articles You Might Like:

How to Make Affordable Colleges Even More Affordable

Talking to Your Kids about an Affordable College

8 Huge Mistakes I Made with My Student Loans




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