Ways to Pay for College

The price tag of higher education in the United States is through the roof and climbing. You could pay close to $100,000 per year at some private institutions! Thankfully, with over 3,000 colleges and universities in the United States, there is a lot of variety in the cost of education. You might wonder how to pay for it all if you are new to the college admissions process. This article will outline several ways to pay for college and what they mean.

Of course, if you can afford college out of pocket and are not concerned with saving money, this article may not be for you. However, there are many other ways to pay for college tuition (and room & board). All in all, there are two main ways to pay for college: free money and money you have to repay. There are also helpful tools to save money for college, such as accounts that multiply your money.

Scholarships:

My college-bound students often ask me how they can get scholarship money. The answer comes in three parts. Scholarships can be offered from a college or university based on merit or specifically tied to a program at the school. The third option is scholarship money gifted to a student from a local organization or fund.

Check out our Scholarship list in the LHCH shop, too!

Merit-based Scholarships:

These are the easiest and best scholarships because they often have few strings attached. Merit-based scholarships are offered to students after their initial application to the school. The college or university will offer the scholarship simultaneously in the initial acceptance to the school. Most merit-based scholarships are offered for four years and have a minimum GPA requirement.

Private schools are usually able to give out more scholarship dollars than public schools. The best way to get money from a school is to apply to a school that you would be a top candidate for. Colleges often have GPA and test score requirements for their top-tier scholarships. Additionally, some require essays or interviews.

Program-based Scholarships:

Most colleges and universities have scholarships tied to specific programs or require separate applications besides the original admissions application. These scholarships can be for honors colleges, research programs, specific majors, women, minorities, or first-generation college students. The lists vary depending on the school.

This is one area where you have to do your homework. Type “scholarship” into the search bar of the school’s website, and you’ll likely find options. You can also directly ask the admissions rep for your area. They are often happy to share this information as they have allocated money and are determined to hand it out to the proper candidates.

Government-funded financial aid grant money

The federal government’s biggest financial aid reward is the Pell Grant. In the past, qualifying for the Pell Grant has been only for students from low-income households. It is described as being for students with extreme financial need. The highest award in the Pell Grant for the 2024-2025 school year is $7,395. This does not cover tuition (or even begin to cover room and board) for most colleges and universities in the US.

Grant money is also available through State-funded programs. In New York State, where I work as a School Counselor, low-income students can qualify for the SUNY Tuition credit and/or the Excelsior Scholarship. In addition, students in the top 5% of their class entering a STEM major can earn the NYS STEM Scholarship for free tuition.

Grant money differs from scholarships because it is paid for by a state, federal, or local government. Best of all, grant money is FREE and must not be repaid.

Loans: student and parent, subsidized and unsubsidized

If I had a dollar for every time I asked a student how they would pay for college, they just shrugged and said, “Loans,” I would be very rich. Gen X and Millennial parents are paying for college twice. First, we took loans in ridiculous amounts to finance our college education, and now, as parents, we are the ones to take the loans for our children’s college education.

Today’s college freshmen will only be allotted a cap of $5500 in federal student loans. $5500 doesn’t even buy a decent car for a 17-year-old; how could it buy a decent education? While I don’t advocate for more loans, this minuscule allowance given to students while colleges are given free rein to charge 50, 60, and 100k per year illustrates how Americans are content with the fact that the poor simply can’t afford a quality higher education. The have’s are happy to keep the have-nots in their place, creating greater poverty and a more divided country. If education is the great social equalizer, a college education should be affordable for all who are equipped enough in capacity for it.

Subsidized loans are student loans that do not accrue interest while you are in school at least half-time or during deferment periods.

Unsubsidized loans are student loans for undergraduate and graduate students and are not based on financial need. Unsub loans accrue interest during in-school, deferment, and grace periods.

Parent plus loans are:

Savings accounts and programs:

State programs: 529 Educational Savings Accounts, Florida Prepaid program

Financial aid and college tuition help are not just on the federal level. States have their own savings programs, such as 529 and Florida’s Prepaid Savings programs. Several states offer 529 Saving Plans, which are essentially savings accounts designated for educational costs that grow tax-free. These programs offer multiple tax advantages and are not attributed as “assets” in your Financial Aid profile. 529 savings accounts can now be rolled over into Roth IRAs if you decide you don’t need the money for college costs in the future. Look for benefits like these before investing.

Special programs:

You don’t have to look to your local government. There are private companies that will help you save money and build your accounts for college as well. Two of the best free programs are Upromise and RaiseMe.

Upromise:

Upromise works with state 529 programs to add money to your savings account from a portion of your spending on shopping. You can earn cash back toward your savings account by shopping at their partners’ stores and websites. From scholarships to other savings advice, Upromise is worth checking out and signing up for a free account.

RaiseMe

Is your child a strong student with a long list of extracurricular activities? If so, they could be getting paid through micro-scholarships from RaiseMe. As early as 9th grade, have your child create an account and regularly input their achievements. RaiseMe also has a college search feature that shows students how their extracurriculars can help them get into college and pay for it.

I hope this article helped you gain an understanding of ways to pay for college. Check out our college planning tools in the Life Happens Coffee Helps Shop.