How to pay for college: 8 strategies to save money

In the 2023-24 school year, average tuition and fees are $11,260 at public in-state colleges, $29,150 at out-of-state public colleges, and $41,540 at private nonprofit institutions, according to the College Board. But that’s just the start—once you factor in essentials like housing, food, textbooks, supplies, and transportation, the full cost of college can skyrocket.

Today, paying for college typically involves a mix of financial strategies. While student loans can provide necessary funds, it's better to avoid them if possible, since they may come with high repayment costs and long-term debt — on average, undergraduates accumulate nearly $30,000 in debt, according to the College Board. Before borrowing money, start with strategies to reduce your college expenses. 

1. Start with the FAFSA

Filling out the Free Application For Federal Student Aid (FAFSA) is essential for unlocking various financial aid options for both new and returning college students. It's your gateway to federal grants, work-study programs, and student loans. 

Even if you're not planning to take out loans, it’s worth submitting the FAFSA, because you might be eligible for aid that doesn’t need to be repaid. In fact, undergraduate students who submit the FAFSA for the 2022-23 school year received an average of $15,480 in financial aid, according to the College Board. Of that, $10,770 was in the form of grants and work-study funds—money that stays in your pocket without requiring repayment.

2. Search for state-funded aid 

Many states offer their own local scholarships and grants for college. State grants are usually awarded based on financial need while scholarships are typically based on merit. Neither must be paid back. The National Association of Student Financial Aid Administrators has a map students can use to discover opportunities in their area. Most state-specific scholarships and grants are limited to state residents. Your school's financial aid office may also have information about funding sources available in your area. 

3. Use 529 college savings 

A 529 plan is a state-sponsored investment account that offers tax advantages for various types of educational expenses. Adults usually start 529 accounts for minors who will attend school in the future. 

“529 plan funds can cover the cost of tuition and fees, room and board—if attending at least half-time—as well as required books, computers, supplies, and/or equipment,” says Patricia Roberts, Chief Operating Officer at Gift of College, Inc., and the author of Route 529: A Parent's Guide to Saving for College and Career Training with 529 Plans.

Funds in a 529 plan grow tax-deferred, meaning you don’t have to pay income taxes on the earnings. Your withdrawals are typically tax-free as long as you use the funds to pay for qualified education expenses (though state tax laws vary). In some states, contributions to a 529 are tax-deductible for residents. 

To cover school costs with a 529 plan, start investing early so you have time to amass a large balance. Returns earned on investments will help the account grow.

4. Earn college credits in high school 

Earning cheap (or even free) college credits in high school can significantly cut down the cost of college later on. One way to earn credits is by taking Advanced Placement (AP) courses. These courses not only introduce you to college-level academics, but they might offer you a chance to earn college credits if you score well on the AP exams. Excelling in these exams can mean less time and money spent on basic college courses, speeding up your path to a degree. 

Enrolling in community college classes while you’re in high school can also help you earn credits. This is often called dual enrollment. Dual enrollment can give you a head start on your college studies and reduce the number of credits required to finish your degree. 

5. Work for an employer that pays for school 

Many well-known companies have tuition reimbursement policies, including Starbucks, Disney, Best Buy, Home Depot, and Target. Tuition reimbursement is an employee benefit in which your employer covers some or all of your education expenses while you work for them. Federal law allows employers to provide up to $5,250 in tuition reimbursement as a tax-free benefit, meaning it doesn’t count as taxable income for you. Depending on your employer’s policy, your field of study may have to be in a related field. 

6. Look for affordable colleges

If you find a school with lower tuition rates, paying the bills will be easier. Here are a few options to consider:

• In-state public colleges: Attending a state college as an in-state resident can help you qualify for discounted tuition, and it’s often one of the most affordable ways to earn a four-year degree. For example, the average cost to attend an in-state public college is $28,840, which is far less than the $46,730 out-of-state students might pay.
• Community colleges: Many community colleges offer 2+2 programs. This means you can complete your first two years of study at the community college before transferring to a four-year school to earn a BA or BS degree. Community college tuition is often a fraction of the cost of a four-year college. To put it in perspective, a four-year public institution might charge in-state students an average of $11,260 annually, while community colleges charge just $3,990 for tuition and fees.
• Free tuition colleges: Some schools are tuition-free, often in exchange for working on-campus or making a post-graduation service commitment. Some examples include Berea College, the Curtis Institute of Music, and College of the Ozarks. 

7. Reduce your expenses

Cutting your college expenses doesn’t have to be complicated. Start by opting for used textbooks, which can often be found online at discounts of 25% or more. The savings can add up quickly.

Housing is another major expense. While living in a dorm or renting an apartment near campus is convenient, it can dramatically increase your overall costs. If possible, consider staying with your parents or another family member while you study. If staying at home isn't feasible, another cost-effective strategy is to share an apartment. Getting roommates to split the rent and utilities can make college much more affordable, turning a financial burden into a manageable expense.

8. Take out student loans if needed

Even after using all of the strategies above, you still might need more money for college. That's when student loans can help. If you need to borrow, start with federal student loans. They come with low-fixed interest rates and benefits like income-based repayment plans and opportunities for loan forgiveness. To see what federal student loans you qualify for, submit the FAFSA. 

If federal loans don’t cover all your educational expenses, private student loans can bridge the gap. While these loans generally lack the perks and protections of federal loans, they do allow you to cover the full cost of attendance, something federal loans might not achieve. For those with good credit, private loans can also offer competitive rates.

Be aware, though, that undergraduate students will often need a cosigner with good credit and proof of income to qualify. Rates and terms vary among private lenders so it's best to get multiple quotes to find the right loan for you.

Check out: Federal vs. private student loans: Which should I choose? 

Compare private student loan rates 

FAQ

What if I don’t have any college savings? 

You can still attend college, even if you don’t have any money saved. Consider exhausting your options for scholarships and grants since you don’t have to worry about paying them back. Next, look for ways to earn money for college, either through a part-time job, internship, or the federal work-study program. Some employers may offer tuition assistance programs for added financial support.

How can I pay for college without my parents?

Most undergraduate students need to include their parents’ income and assets on the FAFSA to determine their Student Aid Index (SAI), but that doesn’t mean your parents have to contribute to your education expenses. If you want to pay for college without asking your parents for help, take advantage of every “free” option, including scholarships and grants. Then look for other ways to pay for college, such as student loans.

Can you negotiate college costs? 

Most colleges don’t advertise it, but you may negotiate the cost of college directly with the schools. This works best when you have valid reasons for negotiation, such as financial need, an excellent GPA and standardized test scores, or you identify as an independent student even though your parents’ income and assets are on the FAFSA.

Should I borrow federal or private student loans?

Federal student loans are often a better option than private student loans because they have fixed interest rates, offer deferral and forbearance options, and you may qualify to have your balance forgiven. Private student loans may offer fixed or variable rates. While some private lenders offer programs to help borrowers through financial difficulties, they don’t participate in federal loan forgiveness programs.