How to Pay for College?

You’re told for years that you need to go to college, but you’re never told how you’re going to pay for it. In this article, we answer this question for you!

When college is on the horizon, you may begin to feel the onset of panic. How on Earth will you pay for America’s most expensive investments? You aren’t alone. Most people can’t afford to pay for college, let alone students, who hardly have income of their own to spare. Fortunately, there ways to pay for college in the form of loans, scholarships, and other methods so you won’t have to suffer through paying the full price tag for a higher education. 


Student Loans

Before jumping into student loans, it’s important to understand how they work. You can borrow from any type of lender you want to, and you’ll find that there are both private lenders for student loans and government student loans.

Loans through government programs are designed to be the most affordable. They’re easy to qualify for, as students often are just starting out on their credit-building journey and don’t have impressive scores at this point in their lives. Federal loans are borrower-friendly, and these student loans are what college-bound students turn to first for their lending solution.

Private lenders, like banks, credit unions, and traditional financial institutions, are another option after you’ve sought out your loans from federal sources. Private lenders may have variable rates, which is more of a risk. If rates rise significantly, you could find your payments increasing in response. New federal loans have fixed interest rates, which for students paying long into the future, is much more beneficial.

For student loans, you’ll be starting with your school’s financial aid office, designed to help incoming and current students with loans, scholarships, grants and other financial aid concerns. You’ll be filling out a FAFSA form, a form that gathers information concerning your financial situation, which is then used to determine your financial aid.

Then, you’ll be applying for aid through the financial aid office and through any other sources. When you have received approval, you’ll need to determine when payments are required.

Types of Student Loans

There are a few types of student loans you should familiarize yourself with that are available through the federal government. 

The most common are:

Perkins Loans: A need-based loan available, but Perkins loans are limited in their supply. The advantages with this particular loan are its low, fixed interest rate, made available to borrowers no matter their credit histories.

PLUS Loans: PLUS loans are federal loans that edge towards similarities to those of private loans. These loans are provided to the parents of the students headed to college. The requirements for PLUS loans entail credit history research on the borrower, with repayment beginning as soon as the funds are issued out. The downside in these student loans is that parents are often left paying them long after their kids have graduated from college, still paying them back years later.

Stafford Loans: Stafford loans offer more money than Perkins loans and are just as easy to qualify for. These loans may have subsidized interest costs. Stafford loans are available to undergrad students and graduate students.


But it’s not all about loans. There are other opportunities to reduce the mountain of funds needed to get you through college, and that’s with college scholarships. Scholarships help bridge the gap between your financial aid and the cost of the school.

Start with your guidance counselor as a resource in discovering potential scholarships and which ones you’ll be eligible to apply for. You can ask your college’s financial aid office as well about scholarship opportunities. Check with your high school teachers, seek help from your parents, and ask your coaches and leaders in the clubs, sports and extracurricular activities you belong to. 

There are also websites that act as helpful online resources in finding and applying for scholarships:

There are even more places to look for scholarships like corporations, churches, professional associations, community organizations, children of veterans, students with disabilities and scholarships for specific interests. What’s critical to remember about scholarships is that you just have to keep trying. There are scholarships out there designed for just about any kind of student. You don’t have to be an ace in the classroom to earn one - you just have to apply.

Other Strategies to Help You Pay for College

Advanced Placement Courses

Does your high school offer an Advanced Placement program? Taking AP classes in subjects you excel in already can help you pay for college. An AP class is taken during high school and a test is offered at its conclusion of the course. This AP test can allow you to test out of some of your college classes and you can skip some general, entry-level education courses, thus saving you money on your education.

Along with testing out of college level courses with an AP test, you can also take advantage of the College Level Examination Program (CLEP). Nearly 3,000 public colleges and universities grant students credit if they pass the CLEP. There are also tuition-free courses dedicated to helping students pass the CLEP so they can earn college credits and lessen the cost of their education.

There’s also concurrent enrollment to consider. Similar to AP classes, concurrent enrollment allows students to earn credit for classes they take during high school that can be applied to college. This varies state to state, so be sure to check with the state university you’re applying to and the high school classes you’re eligible for.

Income-Share Agreements

An income-share agreement (ISA) issues a student the necessary funds to pay for college. In exchange, the student agrees to pay a certain percentage of their future income for a fixed term period. It differs from a traditional loan, as there’s no interest and a zero balance. ISAs are becoming a popular method to pay for college tuitions, with some universities like Purdue even offering help to students to set up an ISA as a form of their student aid.

Payments are ensured to be affordable as agreements are frequently capped at 10% or 15% of the student’s income. However, if the student should get a high-paying job following graduation, the student may end up paying more to their investor. Be sure to do your research before signing up for an ISA, and be well informed on the fine print before signing on the dotted line.

Tuition Reimbursement

If you find that your student loans are overwhelming and all encompassing following graduation, don’t worry, there are solutions, and you can even find help from your employer. Companies like Disney, Starbucks, Wells Fargo and other big-name corporations have programs to help you pay back your education.

Check with your company’s HR department or representatives about applying for a tuition reimbursement program. The entire cost may not be covered, but even a little help is better than none at all.

College is Expensive—But There’s Help

Getting a higher education has become one of the most daunting tasks for students in our modern day. While the thought of paying for something so expensive is terrifying - there’s financial assistance out there in numerous forms.

From student loans to scholarships, you can expect to have your educational price tag whittled down and you won’t be paying full-price. Most students end up with loans to pay back, but they become manageable. By utilizing these strategies early on, you can be smart about paying for college by making a plan.