college funding

How to Pay for College: A Comprehensive Guide to College Funding

College is a huge expense for most students who go to school. With tuition going up, it can feel like college funding options are nowhere to be found. This article will go through all the different ways you can pay for your education- scholarships, savings accounts, grants, reimbursement plans or loans, and even tricks that most people don’t know exist. If you are looking for more information on college funding, we have an entire course you can check out that will take you from start to finish. We’ll talk about the pros and cons so that you can make the best decision for your budget!

1) Scholarships

We have written an entire post about the best strategies for getting scholarships so if you would like to read that please click here. Scholarships are the easiest and best option for college funding. They’re also one of the most common ways, if not THE MOST COMMON WAY that people get their education paid for. Scholarships offer free money in exchange for a certain type of contribution- usually academic excellence, artistic abilities, or community service work.

There are dozens of sites and applications for free scholarship searches. Be aware that scholarships may change annually so make sure you are only going to reputable sites that keep their data up to date. Dollar amounts, minimum requirements, deadlines, and applications can change depending on the university. It is always best to use a scholarship search and then check the specific university’s site for the most accurate information.

2) Grants

Grants are typically the most coveted type of financial assistance a student can receive to go to college. The more in need of finances that they are, the bigger the grant award given. Grants are typically awarded by the federal government, states, or colleges themselves. Amounts of aid a student can expect vary widely depending on the need of the student and the type of institution.

Grants are a unique type of college funding and usually have specific requirements and qualifications:

  • The student or family must have a low income.
  • They are available for students who do not qualify for other types of financial aid or loans
  • Must meet specific requirements like maintaining full-time enrollment, good grades in high school, and more

To be eligible for most grants, students must submit the Free Application for Federal Student Aid. The financial need demonstrated through the FAFSA will help determine a student’s eligibility for grant funding. The FAFSA is available on Oct. 1 each year and the federal deadline is June 30. The sooner a student submits the FAFSA, the more opportunities for aid he or she will have. Timelines vary across state lines, with some states having earlier repayment deadlines than the federal deadline. Make sure you check the state requirements so you don’t bust a deadline.

*Added Note*

The main point to drive when discussing grants is differentiating between scholarships and grants. Often times they are grouped together and many students think they are similar in nature. The only commonality between the 2 typically is the fact that neither has to be paid back. They are not loans, they are free money. However, they are different in nature. Grants are sources of college funding based on need, scholarships are typically chosen on merit.

college funding

3) College Funding savings accounts

College savings accounts might be a great way to save for your student’s future education. The funds amassed through an account can be used towards college tuition, room and board, books, supplies, etc. With the variety of different types of programs out there it’s important to do your research so you know which plan is right for you. Here we will discuss a few of the most popular options.


A 529 plan is a Section 529 tax-advantaged savings plans for paying the cost of college and other qualified higher education expenses. There are two types of accounts: pre-paid tuition programs, which can be used at any accredited institution in the US, or prepaid tuition contracts with specific universities where you purchase credits to pay off your future college costs. Most states have 529 plans. These tax-advantaged accounts allow individuals to contribute up to $15,000 annually without triggering gift taxes. The money grows tax-free if it’s used later for qualified education expenses (as long as you take advantage of federal deductions). Eligible expenses have recently been expanded and now include all of the following:

  • College expenses, including tuition, books, fees, room and board, a computer and more
  • Trade school expenses, please review the Federal Student Aid list
  • Special needs equipment
  • K-12 tuition expenses up to $10,000 of 529 funds per year, per child
  • Student loan payments on behalf of the 529 beneficiary or beneficiary’s siblings up to $10,000 per individual.

Coverdell accounts

Coverdell accounts allow individuals to contribute up to $15,000 annually without triggering gift taxes. The money grows tax-free if it’s used later for qualified education expenses (as long as you take advantage of federal deductions). However, Coverdell accounts have a $2,000 annual contribution limit per child.

Many parents first discover Coverdell ESAs while searching for ways to save for elementary and secondary private school tuition. Now that many state 529 plans allow families to use the funds for K–12 tuition, some parents are transferring accounts to take advantage of the higher annual contributions.

Traditional savings accounts

Many families opt for setting up a savings account for each student at their local bank. That way if family or friends want to add to the account, it’s an easy deposit. Students can also add to their own account if they pick up a part-time job in the future. The beauty of having a traditional savings account is it’s a lot more flexible if the student decides they don’t want to attend college in the future. There are no stipulations on what they need to do with that money. Some drawbacks are there’s no tax benefit and the interest you are accruing is extremely nominal.

4) Loans and reimbursement plans

The more popular form of college funding is the student loan. It can often be a quick and easy process, but it will have to be paid back with interest rates that may get higher than 20%. With many schools having tuition prices well over $20,000 per year, this could end up being overwhelming debt for many students upon graduation. There are 4 main types of college loans: Subsidized, unsubsidized, PLUS loans, and private loans. Let’s break these down and give you a little background on each.

Subsidized loans

These are lent to undergraduate students who meet certain qualifications. These loans don’t accrue interest while the student is in school and during any additional deferment periods granted by the government for those with financial need, like unemployment or other economic hardship.

Unsubsidized loans

These are lent to undergraduate students, as well. However, unlike subsidized loans, they will accrue interest while the student is in school and during any deferment periods granted by the government for those with financial need.

Parent PLUS Loans

PLUS loans are loans that can be used for an undergraduate or graduate degree. These loans are meant to fill the gap that federal student aid programs leave behind as they don’t provide enough funds on their own. Prior to borrowing from the Parent PLUS Loan program, it is best for your child to exhaust eligibility for Stafford loans first. These student loans can have lower interest rates and fees than a Parent PLUS loan.

Some pros of taking this form of loan out is that you can take as much as you need from this loan with a fixed interest rate. Although we do not recommend taking the full load out, if you must and decided to do that, you can at a fixed interest rate. They also give you multiple repayment options when it comes time to pay the debt off.

On the flip side, there are some definite cons to taking PLUS loans as well. As an organization, we have our clients avoid taking loans out at all cost because there are so many ways to make college affordable. We also know that many people disregard our advice and choose a college that is extremely pricey with little to no financial aid options. In this case, you should know the good and the bad of these PLUS loans. Some of these challenges are:

Credit check

You don’t need to have stellar credit but you need to be able to pass a basic credit check. You must not have an adverse credit history. There is a way to get around this credit issue and that is through a cosigner but this is just an additional step that is not ideal.

Origination fee

They do charge an origination fee which is an additional cost on top of the loan amount and the interest payments. The fee is right around 5% so if you are taking out $100,000, that is not a cheap cost to pay.

Payments start immediately

Unlike student loans, parent PLUS loans have a repayment obligation as soon as the loan hits your account. That means you must start paying when your student is in school. This can be challenging when parents don’t have the money to actually pay for college to begin with. Again, just things to consider when talking about taking loans.

Private Loans

Private student loans for undergraduate students function similarly to other types of private loans. Credit and income review will be required to determine your ability to repay the loan which is a problem for most 18-year-olds. This can also affect the interest rate on your loan. You will likely have to have a cosigner on this because most high school graduates do not have an established credit history. These loans are usually filled with caveats along with high-interest rates. Our professional recommendation is to avoid these at ALL costs.

5) Opportunity money for College Funding

This is a topic our organization loves to discuss because we get to dig up fun and creative ways to pay for college. Most people know the traditional ways we discussed above but there are some unique ways to find the cash to go to school. Here are a few ways to help you on your creative journey.

Work study programs

Work-study programs are a great way to get free cash for school. The money you earn from working is often tax-free so that can be an extra bonus. Plus, the work you do in the program may look good on your resume and if it’s part of your major.

Medical condition scholarships

If you have a medical condition, don’t let it stop you from going to college. There are many scholarships that support students with disabilities and illnesses so make sure to research these before giving up hope.

Foster Students

Tuition Waivers are state-funded and legislatively mandated. They allow public universities to waive tuition costs for foster students who meet eligibility requirements. As of 2021, there are 35 states who waive tuition for foster students with more being added every year.

Employer tuition reimbursement

Many students don’t know that companies actually offer to pay their employees to get a degree. It usually comes in the form of an employee benefit and it makes for a very effective way to pay for your degree. AT&T, Chipotle, BP, Home Depot, and Starbucks are only a few that offer this. Just to clarify, these are not scholarships but are reimbursements. Most companies will credit your tuition costs based on grade performance and employment level.

Dual enrollment programs

This is a FANTASTIC way to pay for college. I know some might be thinking that this is a bit of a stretch but let’s break it down. You can effectively graduate from high school with an associate’s degree. Yes, you heard that correctly. You can get your first 2 years of college completed while you are still in high school. That means your 4-year degree is now only 2 years out of pocket plus you are 2 years closer to being a college graduate. There are some pitfalls to this strategy, mainly the fact that you are foregoing lucrative freshman scholarships, but the benefits definately outweigh the challenges. We highly suggest our students who are looking for medical school or law school look into this route. It allows them to fast track their professional career by a few years.

Double up on credits per semester

This might not be what you are thinking as a good college funding strategy but it most certainly is. Let me tell you, 12 units at a 4-year University costs the same amount as 21 units. You are still considered a full-time student and therefore will be paying full-time tuition costs. Consider pushing those semesters hard and bulk up those classes if you can. You can shave off tens of thousands of dollars by doing this. We have seen many students graduate with their bachelor’s degree in only 3 years by doing this. That is a HUGE saving as long as you can keep up with the workload.


College funding is a daunting process for so many families. There is so much misinformation out there, sometimes it is tough to weed through it all. We hope you found this article helpful and can start the research process for your family. If you have any questions or comments, please type them below and someone from our team will be happy to answer them for you. We love hearing from you!

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