8 ways to pay for college

One of the biggest questions high school students and their parents may ask is, "How am I going to pay for college?" From scholarships to grants, college savings plans to student loans, many options are available, but knowing where to start can be confusing. With that in mind, here’s a quick rundown of eight tried-and-true ways to pay for college.

1. Federal grants

A federal grant is free financial aid from the U.S. Department of Education that is awarded to students and families based on their financial needs. Federal grants usually don’t have to be repaid. However, students must qualify to receive them.

To apply, you must complete the Free Application for Federal Student Aid (FAFSA). Your FAFSA is reviewed to determine the degree of your financial need. You’ll be notified of any grants you are eligible for in your financial aid offer. Federal grants include Pell Grants, Federal Supplemental Educational Opportunity Grants (FSEOG), Teacher Education Assistance for College and Higher Education Grants (TEACH), and Iraq and Afghanistan Service Grants. You must fill out a FAFSA every year that you plan to attend school to apply for federal aid.

While uncommon, there are instances when you have to repay a federal grant, such as if you withdraw from school for the year the grant was awarded, so be sure to understand the terms of your federal aid.

2. Scholarships

Just like grants, scholarships are free aid that usually don't need to be repaid, although there may be other obligations associated with them. The difference is that scholarships are often awarded based on merit or other factors, not financial need.

For example, colleges and universities offer scholarships based on a student’s background, interests or achievements. These can include scholarships for academic or athletic performance as well as volunteer service, musical talent or being a first-generation college student.

Various organizations also offer private scholarships. Some have general qualifications that draw in a high volume of applicants while others have specific qualifications with a much smaller pool of applicants. For example, certain private scholarships are available only to students who are eligible for a Federal Pell Grant. But plenty of opportunities are less specific. At Citizens, you could enter to win our annual $15,000 scholarship toward tuition.* No purchase necessary. You can learn more here.

3. Work-study

The Federal Work-Study program is another form of federal financial aid. The program provides part-time jobs to students so they can earn money while paying for educational expenses. If awarded, students will work at either an on-campus or off-campus job and make at least the federal minimum wage, up to the maximum amount of the award.

Students will receive payment from the school at least once a month. They must be paid directly, unless the student requests that funds go to their bank account or back to the school to cover expenses. The FAFSA application will determine whether you qualify for a work-study program. However, jobs aren't guaranteed. You'll need to search and apply for work-study positions on your own. If you aren't awarded work-study initially, you can always ask the financial aid office if other students declined their awards and if other options are available during the semester. Common work-study jobs include tutoring, assisting a professor, working in various campus offices or in the fitness center, computer lab or library.

4. Part-time job income

If a work-study program isn't an option, getting a part-time job could help a student earn additional income . And if the job is off campus, you could learn about running a small business or become more involved in the local community. Some part-time job options for students include babysitting, dog walking and food delivery. If you have a specific skill like graphic design, you could offer your services as a freelancer. Many paid internships are also available to college students. Check with your academic advisor or school career center for any opportunities.

5. Savings Accounts and 529 Plans

How do middle class parents pay for college? One option for families is to save money in a 529 college savings plan or other savings account.

Tax-free disbursements from a 529 — a state-sponsored investment plan for educational costs — can help cover qualified expenses. Those include tuition and fees, room and board, books and other expenses. Remember that you don't have to take a 529 disbursement every year; some years you may have all costs covered through aid and other means. In that case, keep your savings in the 529 as it may continue to earn a return until it's time to start withdrawing.

Also, you or a family member may have set up other college savings gifts and accounts. Custodial accounts allow parents or guardians save by putting money into an account until the child is of legal age. A Roth IRA is traditionally reserved for retirement, but you can use the funds to help pay for certain educational expenses. Typically, one must be 59½ to withdraw funds or else pay a penalty. However, if you’re paying for tuition or other qualified expenses, you’ll avoid the penalty but must still pay the required income tax.

6. Outside the box ways to pay for college

When trying to lower college costs, don't dismiss the minor changes that could add up to major savings. For low- and middle-income families, reducing your college expenses is key. Here are a few additional ways to cut costs:

• Supplies: If you received a long list of books to buy for a course, consider online used book retailers or even renting textbooks for the semester
• Roommates: Do you like having a full house? Consider inviting more than one roommate to split the rent bill for housing. Also, sometimes on-campus housing might be cheaper than renting off-campus.
• Commuting: Is public transportation an option? Or is a pre-owned car possible, rather than buying new for the commute to class? You could also look into online learning, which you can do from home and save on gas money.
• Aid for military families: Is yours a military family? Both the federal government and nonprofit organizations offer college funding to qualified military veterans, future military personnel, active-duty personnel and those related to veterans.
• AmeriCorps: AmeriCorps is a national organization that works directly with nonprofits to handle some of our nation's most pressing issues. Incentives for serving in AmeriCorps include tuition matching, educational awards, in-state tuition for alumni and supplies such as room and board or books.
• A loan from a family member: If borrowing from family, be sure to set clear boundaries or write a contract to ensure there's no falling out when the payment is due. It could be a way for a grandparent or family member to give the gift of education. For the borrower, it's possible this family member won't charge interest, saving you money over time.

7. Tuition Payment Plans

Want to pay more toward your education but don’t have the savings to do so? Contact the school's financial aid or business office to set up a payment plan while you're enrolled. A payment plan allows you to make monthly payments and to continue to chip away at, or even cover, the entire remaining college cost. You may also have to pay an administration fee.

Let's say you still owe $15,000 for the first year after factoring in your federal aid and savings. You don't necessarily have to take out loans to cover the entire remaining expense. Instead, you can make monthly payments during the academic year to cover all or a portion of that $15,000. For instance, you could contribute an extra $5,000 that year by making monthly payments of $500 for 10 months. Then you'd only have to get a loan for $10,000 (instead of $15,000) to cover the balance.

8. Student loans

Once you've exhausted all sources of free aid, college savings, and payment plan options, look at the leftover cost. What other options could be considered to help bridge the gap? It may be time to explore student loan options, starting with federal student loans.

Ready to get help paying for college?

The cost of college can be stressful and confusing. But if you do your research and get organized, you can make the best decision for your personal financial goals. While loans are helpful to bridge any gaps, you have other ways to pay for college. Regardless of what you choose, don't forget to fill out a new FAFSA form before every academic year. We are here to help you reach your dreams. With rate discounts and flexible repayment options, find the Citizens Student Loan™ that fits your life and budget.*