Families with a college-bound child have no choice but to think about how to pay for college. College is a significant investment for families. The average cost of tuition and fees at public, four-year colleges and universities worked out to $10,740 for the 2021-22 academic year, and attending a private university is approximately $38,070 per year.
From there, there are additional costs to prepare for, namely things like room and board, transportation, and regular living expenses. All these costs add up and families need to budget for at least four years for a bachelor’s degree.
So, what are the best ways to pay for college? And how can you start saving now if you have a dependent who will graduate high school in the next few years? There are many schools of thought when it comes to paying for college, but some strategies are definitely better than others.
With that in mind, I reached out to several higher education and financial experts to find out their best tips. From there, I pored over college strategies to find the best ones.
If you’re curious about the best ways to pay for college, here are 9 expert-approved strategies you should try.
Fill out the FAFSA ASAP
According to student loan expert Mark Kantrowitz, who is also the author of How to Appeal for More College Financial Aid, filling out the Free Application for Federal Student Aid (FAFSA) every year is crucial.
The FAFSA is your gateway to federal and state grants, as well as financial aid from most colleges, he says. Not only that, but students who fill out the FAFSA as soon as possible on or after the October 1st start date tend to receive more grants than students who file it later.
“Several types of financial aid are awarded on a first-come, first-served basis, so procrastinating can cost you money,” notes Kantrowitz.
Consider College-Based Employment
You can also pick up an on-campus gig during college, which you can use to earn income for tuition and fees or living expenses. While college-based jobs can vary, Federal Work-Study programs can also be a good option since they let you earn money through jobs that are affiliated with your school.
To find out if you’re eligible for Federal Work-Study programs, you’ll need to fill out the FAFSA.
Work Elsewhere During College
While federal work-study programs and on-campus jobs can help students bring in an income during college, off-campus jobs have the potential to pay more. For example, students could put in some hours in a restaurant, in a sales job, or in any number of other entry-level positions as they work toward a degree. In the meantime, they can use their earnings to pay for college tuition and fees, or to at least cover any interest that is accruing on their student loans.
That said, Kantrowitz cautions that college students shouldn’t work too much since regular work can take too much time away from academics. He also adds that students who work a full-time job are half as likely to graduate with a Bachelor’s degree within six years as compared with students who work 12 hours or less each week.
Pay Attention to Tax Benefits
While this tip only applies after you have used money to pay for college, it’s still important nonetheless. Kantrowitz says it’s crucial to claim education tax benefits, such as the American Opportunity Tax Credit (AOTC), the Lifetime Learning Tax Credit (LLTC), and the Student Loan Interest Deduction on your federal income tax return.
“This can save you a few hundred dollars or more on your taxes based on amounts you spent on tuition, textbooks and student loan interest,” he says.
Save for College in a 529 Savings Plan
Robert Farrington of The College Investor says another excellent way to pay for college is by saving in a 529 college savings plan. Many states offer tax deductions or tax credits for saving (and later paying) for higher education expenses, he says. For example, the state of Indiana offers a 20% tax credit on the first $5,000 families contribute to a 529 plan each year.
Not only that, but money saved for college can grow tax-free over time, and you can use it for eligible higher education expenses without paying taxes on distributions when you’re ready.
And if you think it’s too late to start saving because you have a kid going to college soon, Farrington says you are likely wrong.
“While the best time to save for college is early on, if you’re in a state that has a tax deduction for 529 plan contributions, it might be worthwhile to simply contribute for a short time in order to get the benefit,” he says.
You can do this even if you’re going to withdraw the funds in the near future to pay for qualifying higher education expenses. However, he does add that some states may have a waiting period of one year before you can withdraw, although many do not.
Search for Scholarships
Farrington also adds that students should look at maximizing how much they receive in scholarships. There are a lot of scholarship opportunities available that are merit-based, but sadly, many don’t receive enough applications, he says. And even among those that do get some interest, many applicants are turned away simply for not following the directions. For example, scholarship applications can be tossed for failing to fill out the right forms or not following the format for a required essay assignment.
Regardless, applying for scholarships is a great way to pay for college because this is “free” money that can be earned by spending a little time finding and applying for these opportunities.
To find scholarships in your area, Farrington suggests looking within your network, including organizations you or your family members volunteer at, religious organizations, your parents or other family member’s employers, unions and trade organizations, and more.
To find scholarships in your area, Farrington suggests looking within your network, including organizations you or your family members volunteer at, religious organizations, your parents or other family member’s employers, unions and trade organizations, and more.
“Some schools maintain lists of local scholarships, so ask your guidance counselor or office staff for help,” he adds.
One easy scholarship to apply for is the College Ave Student Loans $1,000 Scholarship Monthly Sweepstakes.
Apply for Grants
Louel Gibbons, Ph.D., who is an English teacher and the author of To Kill a Mockingbird in the Classroom: Walking in Someone Else’s Shoes, also adds that college hopefuls should apply for as many grants as they can since this type of aid doesn’t need to be repaid.
Gibbons adds that common types of grants include Pell Grants, Federal Supplemental Educational Opportunity Grants (FSEOG), the Teacher Education Assistance for College and Higher Education (TEACH) grant, and the Iraq and Afghanistan Service Grant, available to students whose parents died in active military service after September 11, 2001.
The majority of these grants can be accessed by eligible borrowers after filling out the FAFSA form.
Choose a Less Expensive School
Choosing a more affordable school can make paying for college considerably easier. Gibbons even suggests checking out community colleges to see what they have to offer.
“Even if a student’s goal is to attend a 4-year college or university, completing a 2-year Associate degree at a community college and then transferring to the 4-year college or university will save thousands of dollars,” she says. “However, students will want to establish and maintain an open line of communication with the prospective 4-year institution to make sure all credit hours will transfer.”
If you are curious how much different colleges and universities charge for a year of tuition and fees, Gibbons adds that the U.S. Department of Education’s College Affordability and Transparency Center provides helpful and reliable resources that students and their families can use to evaluate colleges based upon net price, graduation rates, state funding, average student debt, and much more.
Cut Living Expenses
Finally, try to figure out a way to live cheaper while you can. After all, lowering your living expenses can help you borrow less for college while helping you avoid racking up other types of debt.
Ways to save can include living at home during college, living with roommates instead of alone, driving an older car, and looking for used books and discounted college equipment and supplies. The more you can avoid spending during your college career, the less money you’ll have to come up with.
