How to Pay for College in 2022?

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Attending your dream college comes with a big financial decision for you and your family. Although everyone’s financial situation is different, most students are in need of some kind of financial aid in order to cover their studying costs. The good news is when it’s time to start planning how to pay for college, there are many ways to ease the economic burden. Check out the following list of options and see which one works for you the best.

How to Pay for College

There are a lot of answers to this question, and most of the time there’s not only one clear option. You probably qualify for some kind of financial aid, and you might even cobble up funds from multiple sources. Either way, make sure you consider all available options before making the decision.

Apply for Scholarships

You don’t have to wait until you’re in your senior year of high school to start looking for ways to pay for college. Unlike student loans, scholarships offer money for college that doesn’t have to be paid back. There are a lot of choices, as scholarships are funded by many different benefactors, and cover a specific area of study, interest, qualification, or achievement.

You can search for scholarships offered by local organizations, which are typically smaller but less competitive than national scholarships.

If you want to be paying for college with a scholarship, it is advisable that you apply for it as early as possible, as most scholarship programs limit the number of applicants they’ll consider.

Start Saving

You will probably need to dip into your savings account to pay for some of your college expenses. According to Sallie Mae’s study on How America Pays for College, a typical family covers around 45% of college-related costs, which is why saving early is an important step and a possible answer to the question: “How do I pay for college?”.

If, as a parent, you start saving from your child’s birth, you will probably have saved the majority, if not all the money needed for covering college expenses by the time they need it.

File the FAFSA

This may be the most important step when looking for a way to pay for college. By filling out the Free Application for Federal Student Aid (FAFSA), you will discover if you’re eligible for financial assistance, such as grants, federal loans, credit union loans, and work-study benefits, so you’ll have more options to consider when you start thinking about how to afford college. This application qualifies students for federal aid such as the Pell Grant, as well as some state and institutional aid.

Even though it may not seem like it, filing the FAFSA form is rather simple and takes only about half an hour, after which you’ll write a Student Aid Report (SAR) summarizing all the information you provided.

Since the financial need is based on the difference between college costs and the expected family contribution (EFC), wealthy families are also eligible to qualify for financial aid, making FAFSA the best way to pay for a high-cost college. However, although it is a prerequisite for getting low-cost student loans, you won’t have to accept the aid after completing the application.

Apply for Grants

Grants are another type of financial aid that you don’t have to pay back given by colleges, states, and the federal government. Most grants are given based on students’ financial needs and are determined by the income reported on FAFSA.

The amount of the grant varies depending on the student’s status (full or part-time), as well as on the tuition cost, and the duration of studies.

Make sure you submit your FAFSA application every year in order to be eligible for receiving federal aid, so you won’t have to worry about how you’ll be paying for your college tuition.

DID YOU KNOW: The Pell Grant amount you’ll receive will depend on your EFC, college’s attendance cost, the number of academic years, and your enrollment status. For 2021-2022, the maximum award is $6495, and the minimum is $650. The maximum EFC score to qualify for the Pell Grant is 5846.

Find a Part-Time Job

Getting a part-time job could really help you out in paying some of your college expenses. Whether you work on or off-campus, having an additional income can be yet another alternative when trying to figure out how do you pay for college.

Consider applying for the Federal Work-study Program that provides part-time jobs to students, allowing them to earn money for paying their educational debt. If awarded, you can work for at least the minimum federal wage paid by your school at least once a month. By filing the FAFSA application, you’ll find out if you qualify for this kind of work-study program.

If, however, you are not eligible for a work-study job, it could still pay to search for another part-time job. Any kind of extra-earned money will be of great significance to you when looking for options to pay for college.

Find More Affordable Colleges

Another option to consider while looking for the best ways to pay for college is to choose a more affordable one and avoid straining your bank account. If you’re opting for a traditional four-year university, make sure you find one that is generous with aid. Consider the school’s price and the cost that you’ll have to pay out of your pocket after including grants and scholarships.

Other options are also available, such as starting at a community college or attending a trade school:

  • Community College

Not only will you save money on financing a college education, but attending a two-year school will include flexible classes, personalized attention, as well as transfer agreements.

If you start your college education at a community college and then transfer to a four-year school, you will save a significant amount of money.

  • Trade School

Another possible shortcut to getting a degree is attending a trade school, also known as a technical school. You could consider this an option if you’re certain about the career path you want to follow, and you don’t want to worry about how to get money for college. These kinds of schools are designed to provide students with skills needed for a specific field, preparing them for direct entry into the workforce.

Ask for Money From a Family Member

After considering your savings, scholarships, and grants, the odds are you’ll still be in need of some money in order to cover all college expenses. You might want to consider borrowing some from your family, but make sure you accept only the amount you need.

Grandparents and other family members are often willing to help their relatives in paying for college, but what you should all keep in mind is that the IRS allows individuals to give financial gifts of up to $15,000 per year without needing to disclose the money to the tax agency. It’s best to speak with a tax professional to make sure everything’s executed correctly.

Compare and Choose a 529 Plan

A 529 college savings plan is designed to allow you to set aside money for educational expenses. The money that you save grows tax-free and can be withdrawn tax-free too, as long as they’re meant for covering college costs, so opting for a 529 plan is probably one of the most convenient tips you can use for paying for college.

However, some plans can vary dramatically on fees, investment options, and return rates, so make sure you compare several plans in order to find the one that works best for you, since you can invest in any state’s 529 plan, not exclusively your home state’s one.

Apply for a Federal Student Loan

If you used up all your other options for paying for your tuition bill but you’re still wondering how to pay for college, consider taking out a federal student loan. These loans are relatively inexpensive, so if you’re an undergrad in need of additional finances, you may qualify for subsidized loans, in which case, the government pays the loan’s interest while you’re attending school.

In order to apply, you’ll need to fill out the FAFSA. There’s no credit check for most federal loans, and everyone who qualifies gets the same interest rate. After you receive the financial aid award letter, you can decide how much you’ll borrow based on the amount you’ve been offered.

Apply for a Private Student Loan

Private student loans are just one of the many ways to pay for college. However, they are widely considered a last-resort option, mainly because they require a credit check in order to get approved. That means it’ll be hard to qualify, as college students generally have little to no credit history. Even if you get approved, your interest rate will be based on your credit score, meaning that your loans could be very expensive for your financial circumstances. In addition, the loans will show up on your cosigner’s credit report (if you’re allowed to have one), which could make it harder for them to get approved for credit in the future.

Nevertheless, if you’ve exhausted all the easy ways to pay for colleges like financial aid or grants, private student loans may be a much better choice than some higher-interest options, like student credit cards, or personal loans.

DID YOU KNOW: Unlike federal loans, private student loans don’t come with a standard interest rate. Instead, the rate is set by the private loan lenders, and even though they usually start lower than fixed ones, they could rise over time, making it harder for you to repay your student loans.

Key Takeaways

Scholarships and grants are considered the best options for receiving college funds, as you don’t have to worry about returns.
Starting a college savings account early will help you save more money by the time your child is ready to go to college, improving your financial circumstances.
Filling out the FAFSA is probably the most important step to discovering your eligibility for any kind of financial assistance.
Getting a job by applying for the Federal Work-study Program will additionally help you in paying off your educational expenses.

Conclusion

Make sure you consider as many college payment options, as what is the best way to pay for college doesn’t come with one definite answer. The key is creating a financial plan based on your goals and budget because coming up with a good strategy would mean that you’ll pay off your debt early, save money on interest, and even get some of it forgiven.

FAQ

How do you pay for college if you can’t afford it?

If you aim for a college you can’t afford, there are several steps you can take in order to provide the money you need. Some of the best options to pay for college are filing the FAFSA, applying for grants and scholarships, and accepting federal student loans.

How do you fully pay for college?

If you’ve received a scholarship or grant, and your parents have started your college savings account on time, you shouldn’t have any problems paying your educational costs. Besides, you can always apply for some kind of financial aid if you’re struggling to provide the funds you need.

How can I pay for college without my parents’ help?

Wondering how to pay for college without asking for your parents’ help? There are several options you might look into, such as applying for scholarships, opting for a college with lower tuition costs, or getting a part or full-time job, depending on your free time.

ABOUT AUTHOR

I learned a lot about finance after working for a digital marketing company specializing in investing and trading stocks, forex, etc. After that, I got exposed to other verticals such as wealth management and personal finance, which further improved my understanding of the financial world.

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