The Best ways to Pay for College

After graduating from high school, many students decide to further their education and expand their career opportunities by pursuing a bachelor’s degree. Unfortunately, college doesn’t come cheaply. During the 2018-19 school year, state residents paid over $10,000 in college tuition fees, while non-state residents paid over $25,000.

Unless you get a full-ride scholarship, chances are you’ll have to contribute at least some of your own funds towards your college education. Here are some of the best ways that a new student can pay for college.

Use Your Personal Savings

Over 40% of families depend on personal savings to help pay for college. In most cases, parents will create savings accounts when their children are young and then collect funds over time. There are also accounts specifically designed to help parents save for college:

  • Education Savings Account (ESA): An ESA lets you deposit $2,000 per year for your child’s college fund and offers a high rate of return. However, you must fall under an income limit to qualify.
  • 529: A 529 plan is a state-sponsored college investment plan that helps grow your money over time. It does not come with any income or deposit limits.

College tuition fees tend to increase every year, so the sooner you start saving, the better!

Take Out A Loan For College

In 2019, nearly 70% of college students took out loans to help pay for college. There are two main types of student loans you can use: federal and private loans. To help you choose, here’s a closer look at how each one works.

Federal Loans

When it comes to paying for college, federal loans are usually a better option than private loans. Not only are they more flexible, but they’re also designed to be more affordable. For example, those with federal student loans are generally allowed to defer their payments if they lose their current source of income. There are two main types of federal loans:

  • Direct subsidized loans: Meant for students with financial needs, these loans don’t make you pay for any interest that accumulates while you’re in school.
  • Direct unsubsidized loans: These loans, which are available to undergraduate and graduate students, accumulate interest while you’re in school.

To apply for federal student aid, you’ll have to fill out the Free Application for the Federal Student Aid (FAFSA). It connects you to all kinds of need-based aid, including scholarships, grants and work-study opportunities.

Private Loans

If you’ve borrowed as much as you can in federal student loans and still need more money, you can apply for a private loan. While you may get one with low interest rates, these loans are generally less forgiving than federal loans. Thus, use them as a last resort.

To qualify for a private loan, you’ll need to have a good credit score and low debt-to-income ratio. If you don’t meet these requirements, you may need someone to co-sign the loan. You can get private loans from the following sources:

  • Banks
  • State-based agencies
  • Credit unions

Be sure to compare the fees and interest rates of all your loan options before settling for one.

Get A Work-Study Job

If you’re a student looking for some extra money to help pay for college, consider getting a work-study job. Unlike traditional on-campus jobs, work-study jobs are only available to students in need of financial aid. In addition to helping you pay off your tuition, they provide valuable work experience.

Work-study positions are considered a form of financial aid and are generally made available through federal programs, not individual colleges. After submitting the FAFSA, you’ll learn whether you qualify for a work-study job. It’s important to remember that qualifying doesn’t mean you’ll automatically get a job — you’ll still have to apply for work-study jobs on your campus and put in work hours.

Apply For Scholarship or Grants

If you want to earn money for college without have to pay it back, scholarships and grants are the way to go. While both offer free money, they differ in the following ways:

  • Grants: Grants are usually a form of need-based financial aid.
  • Scholarships: While some scholarships are awarded based on need, many are given to students that excel in academics, athletics or extracurriculars.

While you may be able to get a scholarship or grant from your school, the Internet can connect you with plenty of agencies and companies that award money. You can also apply for multiple scholarships and grants — the more money you receive, the less you’ll have to pay out of pocket!

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