How to Pay for College (Without Selling Your Soul to the Devil)

Going to college is expensive.

But you already knew that.

Still, did you know the average yearly price of tuition, fees, room, and board was $30,500 during the 2019-20 academic year, according to education researchers at EducationData.org?

That's per year, which means the average total price for getting a 4-year degree is approximately $122,000.

Your college education is an investment in yourself and, thankfully, the hefty ante doesn’t have to be paid all at once. But if you’re planning on going to college you’ll have to come up with the money somehow. Here's how to pay for college.

529 Plan

The obvious place to begin is with the people who have supported you for your entire life: Mom and dad.

Hopefully, your parents have created a 529 college savings plan for you when you were a child. This tax-advantage program was created so families could invest in higher education for children. Money in these accounts can only be used for education and can cover tuition, fees, and room and board, even for off-campus housing.

If mom and dad started a 529 college savings plan for you as a child, then this could be a big contributor to paying for college. It will be used in some ways to determine how much aid you’ll receive as this is considered a financial asset, but it has a minimal effect and will help you more than it will hurt you.

FAFSA

Get familiar with this acronym. It stands for Free Application for Federal Student Aid and is a form you should fill out so you can be considered to receive financial aid.

Aid includes federal grants, work-study programs, student loans, and financing from your state and school and you can qualify if your family's income is $50,000 a year or less.

It’s free to fill out and should be done well before the federal and state deadlines for aid, partly because some colleges award money on a first-come, first-served basis. The federal deadline for the 2021-22 academic year is June 20, 2022, but enrollment begins in October.

Because states and colleges begin award the funds immediately, students who apply early have received twice as much as those applying later. Do not wait. You'll find the applications on the government's Federal Student Aid page.

Scholarships

Scholarships are free money that doesn’t have to be paid back, so it’s worthwhile to start looking for and applying for them as soon as you can. You don’t have to wait until your senior year in high school to start, either.

Many require submitting the FAFSA, but most will also have an additional application.

There are many ways to search for scholarships, starting with the financial aid office at the college you plan on attending. Your high school counselor, local library, and organizations related to your field of interest should also be able to help.

Scholarship amounts will be subtracted from other types of aid you might be offered so that all of your student aid doesn’t add up to more than the cost of attending college.

Grants

Grants are another type of aid that doesn’t have to be repaid. They’re free money from state and federal governments.

Completing the FAFSA can open the door to federal Pell Grant money, which is typically awarded to families with less than $50,000 household income. The maximum award for 2020-21 is $6,345 but the amount you receive depends on your family's contribution to school, how much your school costs, and whether you will be attending school full- or part-time.

Other types of grants are also available, so check with your state to find out what you might qualify for.

Loans

Student loans are the last method you want to use to pay for college. Everything else we’ve listed is free money, and loans must be repaid.

Federal loans

Begin by applying for federal student loans. They have benefits that private loans don’t, such as income-driven repayment plans when you graduate, fixed interest rates, and loan forgiveness programs. They also do not require credit checks or co-signers.

The government offers four different loan types of college.

• 1. Direct subsidized loans. These are based on financial need and range from $5,500 to $12,500 per year.
• 2. Direct unsubsidized loans. These are not based on financial need and range from $5,500 to $12,500 per year. Graduate students can receive up to $20,5000.
• 3. Direct PLUS loans. These loans help pay for expenses not covered by financial aid but require a credit check in order to qualify.
• 4. Direct consolidation loans. These combine all of your federal student loans into one single loan.

Private loans

Private loans can sometimes be cheaper than federally subsidized loans, but you should shop around. Along with low rates, look for loans with protections such as flexible repayment plans or the chance to put off payments for a while if you lose your job and can’t pay them.

• One of the biggest private student loan providers is Sallie Mae, which offers fixed annual percentage rates (APRs) between 4.25% and 12.35% and variable rates between 1.25% and 11.15%.
• College Ave, which requires a credit score in the mid-600s and higher, offers fixed APRs between 3.49% and 12.99% and variable rates between 1.24% and 11.98%.
• Funding U doesn't require a minimum credit score or a co-signer. It's fixed APRs are between 7.99% and 14.99%.

Pick What You Can Afford

If your budget isn’t big enough or you don’t qualify for enough aid, choose a college that’s affordable.

EducationData.org reports the average annual price of tuition, fees, room and board for 2019-20 as:

• 2-year institution at in-state rate: $12,720
• 4-year institution at in-state rate: $21,950
• 4-year institution at out-of-state rate: $38,330
• 4-year private non-profit college: $49,879

As you can see, a community college in your state is the cheapest option. Technical schools are also inexpensive and may be all you need for your career.

Some schools may have higher prices, but they may offer more in grants, scholarships, and other types of financial aid to make them more affordable than colleges with a lower sticker price.

The U.S. Department of Education has a Net Price Calculator that shows how much it costs to attend an institution after subtracting scholarships and grants that don’t have to be paid back.

Each college’s or university’s website also have net price calculators to see what students like you paid the previous year.

Bottom line

You won't have to sell your soul to the devil to get a college education. You will, however, have to do some research, invest time, and fill out a whole lot of paperwork to secure the funds you'll need to pay for school, but it's there. The real key is to make it happen without coming out of school with too much debt.