It’s a loaded question. Asking “How do I pay for college?” is like asking “How do I get healthy?” or “How do I learn another language?” — there are lots of answers, but there’s not always one clear path.
Realistically, you’ll probably have to tap your own savings to pay for tuition, room and board, and other college-related expenses. The average family covers 43% of college costs through income and savings, according to a 2015 report by Sallie Mae.
To pay for the rest, use grants and scholarships, work-study earnings and student loans — in that order. Maximize the amount of gift aid, or cash you don’t have to pay back, before you borrow money to pay for college.
That’s all easier said than done, so here’s a guide to navigating the process.
1. Fill out the FAFSA.
The Free Application for Federal Student Aid, known as the FAFSA, is your ticket into the financial aid arena. Submitting the FAFSA puts you in the running to receive federal grants, work-study opportunities, loans, and some state and school-based aid. Fill it out as soon as possible because some colleges award money on a first-come, first-served basis. In addition to the FAFSA, some schools also require you complete the CSS profile to be considered for aid.
Fill out the FAFSA even if you don’t expect to qualify for any aid, says Ben Miller, senior director of post-secondary education at the Center for American Progress. All students — regardless of family income — qualify for unsubsidized federal student loans as long as they fill out the FAFSA. Plus, many states, colleges and even some private scholarships require applicants to fill out the FAFSA, so if you skip it you could disqualify yourself for those opportunities.
2. Search for scholarships.
After you submit the FAFSA, you’ll have to wait a few weeks — or even months — to hear back about what federal, state and school-based aid you’re offered. In the meantime, search and apply for privately funded scholarships.
There are thousands of scholarships out there, so use a scholarship search tool to narrow your selection. You could be eligible for various awards based on factors including your grade-point average, gender, ethnicity or even an obscure hobby, like raising goats.
You don’t have to wait until you’re a senior in high school to start your scholarship search — in fact, it could pay to start earlier. For example, the Evans Scholars Foundation awards full-ride scholarships to hundreds of golf caddies each year. But you have to be a caddie for at least two years to qualify, which means you’d have to start caddying during your sophomore year in high school at the latest to be eligible by the time you apply at the beginning of your senior year.
3. Review your aid package and decide what aid to accept.
Eventually (usually in late spring if you’re planning to start school in the fall semester), you’ll receive your financial aid award letter. You’ll likely be offered a mix of grants, scholarships, work-study funds and student loans.
- Grants and scholarships: Known as “gift aid,” grants and scholarships provide money you don’t have to pay back. The federal government offers several kinds of grants, including Pell Grants, the largest federal grant program. States and universities also award grants, which tend to be need-based, and scholarships, which are usually given based on a student’s merit or background.
- Work-study: The federal work-study program funds part-time jobs for qualifying college students. But just because you see “work-study” on your financial aid award doesn’t mean you automatically get that money. You have to find an eligible work-study job on your campus and work enough hours to earn all of the aid you qualify for.
- Student loans: You may see a combination of federal, state and private loans on your financial aid award. Most federal student loans are direct loans (either unsubsidized or subsidized), which are sometimes called Stafford loans. You may also be offered Parent PLUS loans, which are federal loans your parents can take out to help you pay for college.
When you’re comparing award letters from two schools, don’t get caught up in the amount of aid you’re offered at either school, says Phil Trout, a college counselor at Minnetonka High School in Minnetonka, Minnesota, and president of the National Association for College Admission Counseling. Instead, focus on the amount you’ll have to pay out of pocket, Trout says. For example, if a $28,000-a-year school doesn’t offer you any aid, and a $60,000-a-year college offers you $10,000 in aid, the first school is still more affordable.
If you think you deserve more aid than you’re offered — maybe your financial situation changed, or your first-choice school offered you less aid than other schools did — you can appeal your financial aid award.
On the flip side, you don’t have to say “yes” to all the aid you’re offered — especially loans. A common rule of thumb: Throughout all of college, borrow only as much as you expect to earn in your first year in the workforce. You should always accept subsidized loans before unsubsidized loans, because you don’t have to pay the interest that accrues on subsidized loans while you’re in school. And take federal student loans before considering any private loans, because with federal loans, you can opt to make payments based on your income and sign up for certain loan forgiveness programs — two perks that most private loans don’t offer.
4. Take out private student loans only if you have to.
Ideally, the aid you accept after filling out the FAFSA — plus your personal savings and any outside scholarships you’re awarded — will cover all your college expenses. But often, there’s a gap. Many students borrow money from relatives in that case, Trout says. Private student loans are another option, but borrow all of the federal loans you’re eligible for before you turn to private loans.
If you do need to use private student loans, compare your options before you choose a lender. Shop around to find the lender that offers you the lowest interest rate and the most generous borrower protections, such as flexible repayment plans or the option to put your loans in forbearance if you’re struggling to make payments.
Remember: You’ll have to pay back any money you borrow after you graduate. Many student loans (all but federal subsidized loans) accrue interest while you’re in school, which means you’ll have to pay back more than you originally borrowed. You can use a student loan calculator to see how much you borrow now will cost you on a monthly basis later.
But don’t let the cost scare you away from college altogether — think of college as an investment, says Nicole Hurd, founder of College Advising Corps, which offers college counseling to high school students in 14 states.
“You can always lose a car and lose a house,” she says. “But you can’t lose an education.”