The Different Ways Families Pay for College (2023)

How to pay for college is one of the biggest financial concerns of families today. And although students assume some of the responsibility for the cost, the majority of it often falls to the parents.

There are several ways to plan and pay for your child’s college education, including 529 plans, regular savings, inheritance, income, scholarships, and loans. Many families end up using a combination of methods to foot the bill.

From parent Susan M:

We’re planning to pay the first two years through our (parent) savings, my daughter’s savings, parent cash flow by picking up extra jobs and cutting expenses, and my daughter’s cash flow from her summer job. Then, either in the spring of her sophomore year or fall of her junior year, she’ll co-op, so she can start to use her co-op earnings for her living expenses. We will pay the rest. (Note: In a co-op program, students usually spend anywhere from three to twelve months–depending on the school–working either part or full-time while cutting back on their school work or not attending classes. The goal is to gain real-world experience and defray the cost of their education.)

From parent Laura M:

We’re using cash flow and savings, and sending our daughter to the school that offers the best aid package. She’s also taking the $5,500 in student loans every year because we want her to have some financial skin in the game.

Regardless of where you are in the planning process, here are some helpful paying-for-college tips, along with real-life strategies shared by members of our Paying for College 101 Facebook group. (Strategies are edited for clarity and flow.)

Federal Loans and Federal and College Need-Based Grants

Many parents rely on federal Direct Loans to cover a percentage of their child’s expenses. These come in two forms: either as subsidized loans (typically available to those with more demonstrated need) or as unsubsidized loans, for those families without demonstrated need. It’s important to arrange and maximize these types of loans first, before exploring any other student loan options. That’s because Direct Loans are the only loans that students can borrow without needing a cosigner, and they have one of the lowest interest rates available to students.

How Do You Qualify for Federal Loans?

The student of any family that submits FAFSA is eligible for a Direct Loan. Access to federal loans is one of the primary advantages of filling out FAFSA.

From parent Gretchen M:

We’re going to take $27,000 in Federal Loans (and will put $75 a week towards paying them off). We skimped and saved every penny we could from the time our daughter was out of daycare. (We have a 10-year-old car with 170,000 miles on it.) My daughter was responsible for her first year….and she worked hard for it.

For many students who qualify, Pell Grants can be a way to get more money for college, with the added benefit that a Pell Grant doesn’t have to be paid back. Of course, it’s not just the federal government that offers need-based aid; plenty of campuses will mix grants and scholarships into the financial aid package.

Parent PLUS Loans and Cash Flow Solutions

Many families are willing to pay for college expenses but want to stretch out the payment process. If you have problems with cash flow but expect to be able to cover the remaining cost of attendance over the next few months, many colleges offer payment plans, either for free or for a nominal fee.

For parents who’d like to help shoulder the cost of college but prefer to spread it out over a matter of years, Parent PLUS loans provide that option, as well as the option to borrow up to the full cost of attendance. Keep in mind that while a Parent PLUS loan can’t be transferred to the student, many families will refinance in the student’s name after graduation.

From parent Claire S:

We have the most deductions taken out of our pay and use our tax return each year for tuition. We’ve cut way back on spending so we save money, and our kids work in the summer. Whatever is leftover comes from Federal student loans and Parent Plus loans

From parent Heather D:

We’re cash flowing four kids through college. We use my whole salary to cover college and extracurricular activities. We have two jobs each. When our fourth child graduates from college we can quit our second jobs and double down and finally save for retirement.

When To Consider Private Student Loans

Beyond scholarships and Federal loans, there are private loans. Parents usually co-sign for these types of loans. Almost all of them offer a deferment during enrollment, meaning that a student won’t have to begin paying back the loan until they graduate, or until they finish graduate school if they continue with their studies. Interest, however, accrues from the time the loan is dispersed. As with any loan, it’s important to have a conversation with your child about how interest rates work, and the expected amount they will need to pay each month.

If you’re researching borrowing money for college, College Ave Student Loans can help. College Ave offers a wide range of private student loan options to help your family pay for college. Besides competitive interest rates and multiple repayment options, they offer useful tools like their free credit pre-qualification tool which allows you to see whether you qualify for a loan and what interest rates you can expect without impacting your credit score.

From parent Lauren S:

I’ll be taking loans. Period. I have my own loans…It (affordability) is all a matter of perspective.

529 Plans and Other Kinds of Savings

Another way parents are saving for college, and then paying for it is with a 529 College Savings Plan. These plans allow you to take out the money tax-free provided you use it to pay for college-related expenses.

Some costs (such as transportation) may have to be paid through other means, such as savings.

From parent Michelle M:

I have two 529 plans for each of my children. One my parents set up, and one I set up–we have two children and four 529s. I’m hoping to cash flow as well. I have a decade to keep saving for my son and 15 years for my daughter. I budget carefully. We don’t take vacations. For holidays I ask for stocks for the children or 529 contributions. My kids also will only look at in-state schools, and they will commute to cut expenses.

From parent Lauren S:

I started investing in a stock portfolio, and in cryptocurrency.

From parent Christine H:

We’ve been saving since the day our daughter was born. Little by little. I suggest you live below your means and pick a school within your means. We got some money from the school, but will lose most of it next year. We do expect her to take out some loans in her name…We will try to minimize those if we’re able.

From parent Kathleen M:

We refinanced our house and took cash out.

From parent Christine A:

We only have one child. Neither my husband nor I went to college, so it’s our dream that our daughter can go without worry. We’re paying for her full undergraduate degree from 529s and stocks. Anything left over can be used for graduate school. We sacrificed many vacations and a nicer home to be able to do this.

How Grandparents or Inheritance Help Pay for College

Not all of us can have a rich uncle, but extended family members are often happy to help, either through a gift or through inheritance. Even if it isn’t enough for everything, a grandparent’s gift can help subsidize other sources, such as savings.

From parent Rima K:

We hope to pay from savings/inheritances and cash flow. If they go to in-state public schools we should be able to do it. If they want private schools, then likely some sort of loans will be in the picture, within limits. They both know the max we will contribute.

What Are Merit Scholarships and Private Scholarships?

Merit scholarships are awarded to students based on their achievements–academic, extracurricular, or talent. Schools award merit scholarships from their own institutional funds and this type of scholarship will likely be the largest source of scholarship money for most students.

Private scholarships are from nonprofits, businesses, or individuals. While big-name private scholarships may pay more, the odds are greater for finding smaller scholarships within the student’s own community. College Ave Student Loans offers a $1,000 monthly scholarship. They choose one winner each month, so you can enter monthly for a chance to win.

Keep in mind that for financial planning purposes it’s best to formulate a strategy based on what you realistically can afford for pay. Families can estimate merit scholarships by seeing if the college shares specific criteria on their website, such as how the University of Alabama shares this information.

If a college is not as transparent about how they offer merit scholarships, look for the school’s Common Data Set–specifically, the number of students without need receiving merit scholarships, and the average amount of a merit scholarship. Road2College’s College Insights tool allows families to easily find all of this information. You can also do reverse look-ups by entering search criteria. You’ll receive a list of schools where your student is most likely to receive merit scholarships.

What Are Public Scholarships?

For students in some states, like Florida or Georgia, heavily subsidized tuition is available if they want to stay in-state and go to a public university. In Florida, for example, Bright Futures scholarships pay for a portion, or in some cases all, of a student’s tuition and fees. Note that these do not cover room and board. Still, for some families, it’s a great deal and a great opportunity.

From parent Daniella S:

Mine will be going to a Florida state school, and we have a Florida Prepaid College Plan and a Bright Futures scholarship. I’ll help with living expenses for the first two years, then they’re on their own for the most part. I’m not going into debt and neither will they, unless they absolutely choose that.

Can Students Work During College?

For students today, it’s much more difficult to cover a substantial amount of their own education by working during school. That said, a part-time or summer job can still be very helpful.

From parent Sandy H:

I live in the smallest house in my neighborhood. I’m sacrificing vacations and extras. My children are helping with summer jobs and part-time jobs. They both have large scholarship/aid packages from private liberal arts schools. They have to keep their GPAs at 3.0 or above to keep their scholarships. I never got a dollar from my family for college, and my grades really suffered from all the hours I had to work to pay for college. I want them to be able to enjoy college and do well academically.

There’s more than one way of making the dream of sending your child to college a reality. And while it’s true that only a few lucky families will have a single solution to the challenge of paying for college, every little bit from every little source adds up. So do your research, then set a financial goal and craft a plan that your family can work towards together.

This article was sponsored by College Ave Student Loans.







What are 5 different ways to pay for college? ›

Top 5 Ways to Pay for College: College Financial Aid, Explained
  • Apply for a Scholarship. Scholarships are typically merit-based. ...
  • Apply for a College Grant. College grants are need-based, and like scholarships, grants don't have to be repaid. ...
  • College Work Study. ...
  • Federal Student Loans. ...
  • Private Student Loans.

How do most families pay for college? ›

On average, the largest portion of college costs (43%) is paid from the parents' income and savings, according to the survey. That's followed by scholarships and grants (26%), and then a combination of borrowing (18%), student income and savings (11%), and money from other family members (2%).

What are the ways people pay for college? ›

You can get grants, scholarships, and work during school to cut down the costs. You can also go to an affordable school and find ways to cut down on living expenses.

How do middle class parents pay for college? ›

Students and families who do not qualify for Federal Pell Grants and Institutional need-based aid have several different options including scholarships, Federal Work Study, Federal loans for students, Federal loans for parents, private educational loans, and family savings and out-of-pocket payments, including payment ...

How do people afford college without parents help? ›

No parental support for college students? 7 ways to pay on your own
  1. Fill out the FAFSA.
  2. Apply for scholarships.
  3. Get a job.
  4. Look into tax credits for qualifying college expenses.
  5. Minimize your college costs.
  6. Research tuition assistance programs.
  7. Consider taking out federal student loans.
Jan 27, 2023

How do you pay for college if your poor? ›

Here are nine ways to pay for college with no money:
  1. Apply for scholarships.
  2. Apply for financial aid and grants.
  3. Consider going to community college or trade school first.
  4. Negotiate with the college for more financial aid.
  5. Get a work-study job.
  6. Trim your expenses.
  7. Take out federal student loans.
Oct 26, 2022

What are three different ways people can pay for college if their parents can't afford it? ›

Grants, work-study, loans, and scholarships help make college or career school affordable. Financial aid can come from federal, state, school, and private sources to help you pay for college or career school. Learn more about the different types of financial aid.

What are 3 options for paying for college? ›

  • Scholarships. Scholarships offer money for college that does not need to be paid back. ...
  • Grants. Grants, like scholarships, do not need to be repaid. ...
  • Work-Study. A work-study program provides part-time employment opportunities while you're in school. ...
  • Your Own Income and Savings. ...
  • Federal Student Loans. ...
  • Private Student Loans.
Nov 1, 2022

What are 10 ways to pay for college? ›

Here are some other options you may not yet have considered for easing the financial burden of attending college:
  • 529 college savings plan.
  • Local scholarships.
  • Financial aid appeals.
  • No-loan schools.
  • Employer tuition assistance.
  • Advanced Placement and dual-enrollment credits.
  • Prior learning assessments.
  • ROTC programs.

Do colleges look at parents income? ›

Student and parent income are big factors when colleges hand out financial aid. But only some income counts. Here's what you need to know about how your and your family's income can affect your financial aid eligibility.

Do my parents make too much for FAFSA? ›

What is the maximum income to qualify for money from the FAFSA? There are no set income limits to get need-based aid. However, to qualify for a zero expected family contribution your family needs to make no more than $27,000 per year.

Do parents usually pay for kids college? ›

85% of parents pay for a portion of their child's college tuition, according to Sallie Mae's How America Pays for College 2021. The reality is, even a percentage of the total college bill can be tough for most families to pay. How much exactly should parents be saving?

What if my parents are rich but won t pay for college? ›

If your parents or guardians refuse to pay for college, your best options may be to file the FAFSA as an independent. Independent filers are not required to include information about their parents' income or assets. As a result, your EFC will be very low and you will probably get a generous financial aid offer.

What if my parents refuse to fill out the FAFSA? ›

Get Private Scholarships and Grants

Even if you have trouble filing the FAFSA without your parents or guardians, you can apply for private scholarships and grants yourself. The great thing about these two options is that both provide free money — unlike student loans, they don't require repayment.

What happens to people who can't afford college? ›

If you can't pay your college tuition, your school account could be placed on hold. This means you might not be able to attend classes, receive financial aid, or have your diploma issued until your account is brought up to date.

What to do if you get accepted to college but can t afford it? ›

Call your school's office of financial aid and speak to them about the appeals process. Be prepared to provide documents such as a parent's letter of termination. Alternately, if you've been admitted to a peer institution that provided a more generous aid package, colleges will usually meet the peer school's aid.

How do college students get loans without parents? ›

You can get a private student loan without a parent, as well, but there's a pretty big catch. Private student loans generally require a creditworthy cosigner, but the cosigner does not need to be your parents. Someone else with a good or excellent credit score can cosign the loan.

Why are parents expected to pay for college? ›

Parental financial support can send a message about the importance of education and inspire a student to work harder. In addition, these experts suggest that paying for a child's education is an investment in a child's future — giving them a shot at better career options.

What is the most common way that students borrow for college? ›

The two most common ways to borrow are federal student loans and private student loans.

What is the best source of money for college? ›

Some types of financial aid are better than others, so use the following advice in this order when planning how to pay for college:
  1. Fill out the FAFSA. ...
  2. Search for scholarships. ...
  3. Choose an affordable school. ...
  4. Use grants if you qualify. ...
  5. Get a work-study job. ...
  6. Tap your savings. ...
  7. Take out federal loans if you have to.
Dec 7, 2022

How can I pay for college if I make too much money? ›

If you don't qualify for federal aid or simply need some extra cash to cover your costs, a private loan could help. Just pay attention to the terms of your loan agreement. You may need a student loan cosigner, like a parent or relative, with an established credit history and consistent income.

How many parents pay for college? ›

Recent studies show that 85%³ of parents pay at least a portion of their child's tuition. And considering college tuition has been on the rise for the past two⁴ decades, parents have begun to leverage savings, retirement accounts, and equity to cover the cost of higher education.

How much money does the average family save for college? ›

Americans seek to save $55,342 on average for their child's college expenses. On average, parents expect to pay roughly 30% of their child's college expenses. On average, parents actually pay 10% of their child's college expenses.

What are the 5 main categories of college costs? ›

is made up of five different types of costs:
  • ROOM & BOARD. The cost of a place to live and the meals you eat for the school year. ...
  • BOOKS & SUPPLIES. The cost of such items as books, course materials, office and art supplies. ...

What are the 3 main sources used to help students pay for college? ›

There are 3 different types of funding opportunities a student may look for, namely:
  • Scholarship.
  • Bursary.
  • Study Loans.

What are ways to pay for college without loans? ›

  • Apply for Grants. ...
  • Scholarships. ...
  • Ask for More Money. ...
  • Get a Work-Study Job. ...
  • Take Required Core Classes at the Local Community College. ...
  • Live Off Campus. ...
  • Take Advantage of Employer Reimbursement Programs. ...
  • Ask Friends, Family, and Even Strangers.
Nov 29, 2022

How can I pay for college without parents or loans? ›

No parental support for college students? 7 ways to pay on your own
  1. Fill out the FAFSA.
  2. Apply for scholarships.
  3. Get a job.
  4. Look into tax credits for qualifying college expenses.
  5. Minimize your college costs.
  6. Research tuition assistance programs.
  7. Consider taking out federal student loans.
Jan 27, 2023

How can I pay for college without financial aid? ›

9 Ways to Pay for College Without Financial Aid
  1. Complete Your FAFSA. ...
  2. Qualify for Merit Scholarships. ...
  3. Apply for Private Scholarships. ...
  4. Apply for ROTC Scholarships. ...
  5. Attend a Community College. ...
  6. Earn College Credit in High School For FREE. ...
  7. Get a Job, or Two. ...
  8. Education is a Gift.
Jun 17, 2021

How do I send my child to college without going broke? ›

Parents: Here's how to help pay for college without going broke
  1. Create a college savings plan. Advertisement. ...
  2. Apply for PLUS and private loans. Right now, 3.4 million parent borrowers have Parent PLUS Loans, which they use to help their children pay for college. ...
  3. Cosign student loans. ...
  4. Tap into retirement plans.
Feb 28, 2018

What is the biggest expense for colleges? ›

Tuition and fees are the biggest expense of going to college. Living expenses and lifestyle are also college cost considerations. There are many things you can do to keep college costs to a minimum.

What are the four main expenses? ›

You might think expenses are expenses. If the money's going out, it's an expense. But here at Fiscal Fitness, we like to think of your expenses in four distinct ways: fixed, recurring, non-recurring, and whammies (the worst kind of expense, by far). What are these different types of expenses and why do they matter?

What are the 6 types of cost? ›

Types of Costs
  • Fixed Costs: Fixed costs stay the same and do not change throughout the project lifecycle. ...
  • Variable Costs: Variable costs are costs that change with the amount of work involved with a project. ...
  • Direct Costs: Direct costs are expenses that are billed directly to the project. ...
  • Indirect Costs: ...
  • Sunk Costs:
Feb 20, 2023

What are 4 sources of funding college? ›

Financial aid for college is available from several sources, including the federal and state governments, colleges and universities, and private organizations. Private sources include private foundations, non-profit organizations, philanthropists, corporations and other businesses, education lenders and employers.

What are the 3 types of financial aid? ›

Types of Aid
  • Grants: Financial aid that generally doesn't have to be repaid.
  • Loans: Borrowed money for college or career school; your loans must be repaid with interest.
  • Work-Study: A federal work program through which undergraduates and graduate students at participating schools earn money to help pay for school.

What are the different sources of funds of the school? ›

Regarding the composition of final funds allocated to schools, central government funding of public services depends mainly on taxes, while the sub-central revenue mix includes both taxes (whether own taxes or those shared with other tiers of government) and transfers from higher levels of government.


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