Paying for college is already expensive — and costs continue to climb. Everyone is paying more, according to College Board.
In fact, in-state tuition and fees for four-year colleges for the 2017-18 school year rose 3.1 percent compared with the year prior. This increase in tuition costs brought the costs of in-state tuition to $20,770 this year. There were also increases for out-of-state tuition, increases in tuition at private colleges, and increases in tuition at two-year college.
Covering college costs can seem insurmountable, but there are lots of ways to pay for college including federal and private loans for students and parents, grants, scholarships, and working while in school.
This guide will answer questions about the kind of costs you may need to pay when you go to college.
- What do you have to pay for college?
- What is tuition?
- What are options when paying for college?
- How do you pay college tuition without loans?
When you go to college, there are a number of costs you’ll have to pay. In addition to tuition, you’ll also have to pay for books; room and board (unless you’ll continue living at home); lifestyle expenses, including food and entertainment; and additional costs, such as car payments if you must drive to school, and travel expenses if you want to study abroad.
Tuition and school fees, along with room and board, are usually your most significant expenses. However, as the chart below shows, other expenses still add up to thousands of dollars each year, so you’ll need to factor these other costs into your college payment plans.
Tuition — the price colleges charge students to attend classes — is the first thing students need to plan on paying.
Students may also need to pay other fees for enrollment, in addition to tuition. For example, summer classes at the University of Buffalo cost $270 in tuition per credit hour, with additional fees including a comprehensive fee, academic excellence fee, activity fee, and transcript fee.
The costs of tuition vary by institution; if you’re concerned about paying for college, looking for schools with low tuition is a good way to keep costs under control.
Tuition at a two-year college for in-district students is typically the least expensive option, followed by state school tuition for in-state students, state school tuition for out-of-state students, and tuition for private four-year colleges. This chart from College Board shows average published tuition for different types of educational institutions.
Because tuition is much lower at some schools than others, one of the best ways to make paying for college easier is to opt to at least start your education at an inexpensive school. To help lower costs, you could complete many of your credit hours at a community college and then transfer to a state or private school to finish up your degree.
Of course, even tuition at a two-year college still costs thousands. As College Board explains, most students do not pay the full tuition out-of-pocket. Instead, they receive financial aid that helps to cut the costs of tuition.
When do you pay for college tuition?
College must be paid for before you attend school or at the time when you are attending. Paying college tuition on time is essential, as many colleges will not allow you to register for classes until your tuition has been paid and many colleges will drop you from courses if your tuition is late.
Different schools have different rules for when college tuition is due, but payment usually must be made before the start of each semester or at the beginning of each trimester or semester.
For example, at Penn State University, tuition is due for the fall semester on August 22 and is due for the spring semester on January 5. However, at UC Davis, undergraduates must pay tuition for the fall semester by October 10, and the spring semester by April 13.
The bursar’s office at your college should provide you with information on exactly when payment is due. Schools may also charge late registration fees or impose other late charges if you fail to make tuition payments by the deadline set by the school.
Most schools do not require you to pay tuition for the entire year up front. However, if you receive financial aid, the grant or loan you receive typically covers a full academic year. As the Department of Education explains, when you receive a grant or loan for the full academic year, your school typically pays out your money once per term, or twice per academic year.
If it is too hard for you to pay your entire tuition when the semester first starts, you can discuss with your school how college payment plans work so you can find out if choosing a payment plan would make attending school more affordable.
How do college payment plans work?
Many schools also offer flexible payment plans to make it easier to afford the cost of tuition. In fact, College Board explains there are a number of different creative financing plans at most academic institutions.
These financing plans could include prepaying all four years of tuition at the beginning of your education to lock in a lower rate, or making monthly payments so you can spread out your tuition cost and do not have to pay the entire amount all at once.
Making monthly payments for college can make it much easier if you are trying to work your way through school since you can pay a smaller amount at a time. Although you are not typically attending school for the full 12 months of the year, the repayment plan could still allow you to stretch your payment out over 12 months.
However, College Board indicates that some schools charge for monthly payment plans or other extended payment arrangements. If your school charges fees, you’ll need to factor in this added cost when deciding if you should make monthly payments for college.
Whether you pay tuition at the start of the school year, the start of each semester, up front for four years, or on a monthly basis, you’ll need to make sure you have the money to cover your costs.
Before you start school, you should have a plan not only to pay for tuition, but also to cover your other expenses including room and board, activity and academic fees, and other costs of living. You can obtain the money for school from:
- Grants and scholarships
- Personal savings and financial help from parents and other relatives
- Working while in school
- Federal loans for students or parents
- Private loans for students or parents
Most people use a mix of different payment options to afford the cost of college. The “How America Pays for College” report from Sallie Mae shows the breakdown of how costs are typically covered.
As the chart shows, many students rely on both funds that do not have to be paid back, such as scholarships and grants, along with money from relatives, friends, and parents. However, loans are a major source of college funding, and both parents and students borrow to pay for school. The fact students often need so many sources of funds for college shows just how expensive college has become and how challenging it is to find the funds to pay for it.
The information below about each of these funding sources can help you to decide on the mix of funding you’ll need to pay for school.
Grants and Scholarships
Because you do not have to repay grants and scholarships, they should typically be your first choice when exploring ways to pay for college. Grants and scholarships can come from many different sources, as this chart from College Board shows.
Students should start looking for scholarships in their junior year, according to Ronald Ramsdell, founder of More College Money. There are many different sources of scholarships and grants, including:
- Federal grants, including Pell Grants, Federal Supplemental Educational Opportunity Grants, and Teacher Education Assistance for College and Higher Education
- State grants, such as the New York’s new Excelsior Scholarship Program
- Grants and scholarships from the school you are attending
- Scholarships from employers, labor unions, and professional organizations
- Scholarships from churches and community groups
- Scholarships from volunteer organizations
- Scholarships offered by banks and credit unions
- Scholarships from charitable organizations
- Scholarships from health organizations
- ROTC scholarships
- Veterans’ services organization scholarships
You should ideally begin looking in your local community, as there may be less competition and it may be easier to obtain a scholarship if you start with organizations that you and your family and friends are members of. Scholarships.com, Fastweb, and MoolahSpot can all help you to find national grants and scholarships to apply for as well.
Personal savings and financial help from parents or other relatives
If you or your family have savings, tapping into savings is often the next best option to pay for college after you’ve exhausted scholarship and grant opportunities.
You and your family are expected to contribute if you have assets available and, in fact, when you complete college financial aid forms, you need to provide information about income and financial accounts for you and your parents so an expected family contribution can be determined.
However, while savings is a good way to cover college costs, parents typically shouldn’t compromise their retirement security by foregoing retirement savings or cashing in retirement accounts to cover college costs. While there are loans available to pay for a student’s education, no loans are available to fund retirement and parents don’t want to be broke as seniors because they’ve spent all their savings on college.
This chart below from Fidelity provides information on how to estimate expected family contributions. You can also use this calculator at College Confidential to get an idea of how much you and your family will be expected to contribute.
If your goal involves paying for college tuition without loans, work-study programs or freelancing during school could help cover the costs of college and likely should be a top option after exhausting scholarships, available savings, and family contributions.
Federal work-study programs might be an option for undergraduate, graduate, and professional students who are attending school full-time or part-time and who have financial needs. Jobs through federal work-study programs often involve doing work related to your studies or community service work, which makes these jobs a great way to earn money for tuition while also building your resume.
However, you’ll need to make sure your school participates in the federal work study program by checking with the financial aid office, and you’ll need to both qualify for a work-study job and be able to find a job.
When your school provides information on your financial aid package, you’ll be offered a federal work-study award if you are eligible based on financial need. You can find out a lot more about federal work-study programs by reading our guide.
There are also a number of side gigs you could do while attending school, and with careful budgeting, working during school might make college affordable without loans — especially if the school offers a flexible or monthly payment plan.
Of course, if you’re hoping to pay for the costs of your education by working your way through school, choosing an inexpensive school or a school known for being generous with financial aid will make this a lot easier.
Federal loans are one of the most popular sources of college funding, and often should be the next source of payment for college expenditures after you’ve exhausted your scholarship opportunities, your contributions from savings, and are unable to earn additional funds through work.
Federal loans available to undergraduate students are called Direct Loans, or Stafford Loans. There are both subsidized and unsubsidized Stafford Loans, but there are maximum limits on how much students can borrow. This table shows the maximum limits for federal loans for student borrowers.
|Year||Dependent Students (except students whose parents are unable to obtain PLUS Loans)||Independent Students (and dependent undergraduate students whose parents are unable to obtain PLUS Loans)|
|First-Year Undergraduate Annual Loan Limit||$5,500 — No more than $3,500 of this amount may be in subsidized loans.||$9,500 — No more than $3,500 of this amount may be in subsidized loans.|
|Second-Year Undergraduate Annual Loan Limit||$6,500 — No more than $4,500 of this amount may be in subsidized loans.||$10,500 —No more than $4,500 of this amount may be in subsidized loans.|
|Third-Year and Beyond Undergraduate Annual Loan Limit||$7,500 — No more than $5,500 of this amount may be in subsidized loans.||$12,500 — No more than $5,500 of this amount may be in subsidized loans.|
|Graduate or Professional Students Annual Loan Limit||Not Applicable (all graduate and professional students are considered independent)||$20,500 (unsubsidized only)|
|Subsidized and Unsubsidized Aggregate Loan Limit||$31,000 — No more than $23,000 of this amount may be in subsidized loans.||$57,500 for undergraduates — No more than $23,000 of this amount may be in subsidized loans.
$138,500 for graduate or professional students — No more than $65,500 of this amount may be in subsidized loans. The graduate aggregate limit includes all federal loans received for undergraduate study.
Source: Department of Education
When students are eligible for subsidized Stafford Loans, the government pays interest while the student is in school, as well as when loans are in deferment. For unsubsidized Stafford Loans, students are responsible for covering interest costs. If students do not pay interest while in school, interest continues to accrue and is capitalized, or added on to the loan balance so students pay interest on the interest.
Federal loans are typically preferable for undergraduate students compared with private loans because federal loans provide advantages not available with private loans. These advantages include lower interest rates than private loans, an easier qualification process, and more flexibility in repayment including income-driven repayment plans and public service loan forgiveness programs.
Parents may also take out federal Direct PLUS Loans. Unlike with federal Direct Loans for students, a parent’s credit score is a factor in applying for PLUS loans and parents cannot qualify with an adverse credit history.
To obtain Direct Loans for students or Direct PLUS Loans for parents, students must complete the Federal Application for Student Aid (FAFSA) each year. The FAFSA can be completed online at the FAFSA website or a paper copy can be requested by calling 1-800-4-FED-AID. The FAFSA should be completed in October when it becomes available, as aid can run out.
If students do not receive enough financial aid, and don’t have the money to cover the costs of their chosen school, working during school or taking private loans may be the only options to ensure there is enough money to fully pay for college.
If students have exhausted other funding options, private student loans can provide additional money to cover college costs. As this chart from the Consumer Financial Protection Bureau shows, there are downsides to private loans compared with federal loans, including higher costs, less flexibility regarding repayment, and the possibility of payments rising if students take variable rate private loans.
Qualifying for a private loan can also be difficult unless students have a cosigner willing to commit to the lender to be held equally responsible for loan repayment. This is because private lenders consider credit scores, as well as consider a borrower’s income when determining whether to approve a loan and how much to lend. Many students don’t have much income and haven’t had time to build a good credit score, so they often won’t qualify on their own.
There are a number of private lenders, and students should compare private loans carefully to find a loan that works for them if relying on private loans becomes necessary to fund college costs.
Need a student loan?Here are our top student loan lenders of 2018!
|1 Important Disclosures for CollegeAve.
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
2 Important Disclosures for Discover.
3 Important Disclosures for Ascent.
Before taking out private student loans, you should explore and compare all financial aid alternatives, including grants, scholarships, and federal student loans and consider your future monthly payments and income. Applying with a cosigner may improve your chance of getting approved and could help you qualify for a lower interest rate. Ascent Student Loans may be funded by Richland State Bank (RSB) or Turnstile Capital Management, LLC (TCM), which are not affiliated entities. Certain restrictions and limitations may apply. Ascent Student Loan products are subject to credit qualification, completion of a loan application, verification of application information and certification of loan amount by a participating school. All loan products may not be available in certain jurisdictions. Other terms and conditions apply. Ascent is a federally registered trademark of TCM and may be used by RSB under limited license. Richland State Bank is a federally registered service mark of Richland State Bank.
* Application times vary depending on the applicants ability to supply the necessary information for submission.
* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.
4 = Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
5 Important Disclosures for PNC.
PNC Bank is one of the nation’s largest education loan providers. For over 40 years, PNC has been committed to helping students and their families make possible the adventure of college.
6 Important Disclosures for SunTrust.
Before applying for a private student loan, SunTrust recommends comparing all financial aid alternatives including grants, scholarships, and both federal and private student loans. To view and compare the available features of SunTrust private student loans, visit https://www.suntrust.com/loans/student-loans/private.
Certain restrictions and limitations may apply. SunTrust Bank reserves the right to change or discontinue this loan program without notice. Availability of all loan programs is subject to approval under the SunTrust credit policy and other criteria and may not be available in certain jurisdictions.
SunTrust Bank, Member FDIC. ©2018 SunTrust Banks, Inc. SUNTRUST, the SunTrust logo and Custom Choice Loan are trademarks of SunTrust Banks, Inc. All rights reserved.
7 Important Disclosures for LendKey.
Additional terms and conditions apply. For more details see LendKey
8 Important Disclosures for CommonBond.
A government loan is made according to rules set by the U.S. Department of Education. Government loans have fixed interest rates, meaning that the interest rate on a government loan will never go up or down.
Government loans also permit borrowers in financial trouble to use certain options, such as income-based repayment, which may help some borrowers. Depending on the type of loan that you have, the government may discharge your loan if you die or become permanently disabled.
Depending on what type of government loan that you have, you may be eligible for loan forgiveness in exchange for performing certain types of public service. If you are an active-duty service member and you obtained your government loan before you were called to active duty, you are entitled to interest rate and repayment benefits for your loan.
A private student loan is not a government loan and is not regulated by the Department of Education. A private student loan is instead regulated like other consumer loans under both state and federal law and by the terms of the promissory note with your lender.
If your private student loan has a fixed interest rate, then that rate will never go up or down. If your private student loan has a variable interest rate, then that rate will vary depending on an index rate disclosed in your application. If the interest rate on the new private student loan is less than the interest rate on your government loans, your payments will be less if you refinance.
If you don’t pay a private student loan as agreed, the lender can refer your loan to a collection agency or sue you for the unpaid amount.
Remember also that like government loans, most private loans cannot be discharged if you file bankruptcy unless you can demonstrate that repayment of the loan would cause you an undue hardship. In most bankruptcy courts, proving undue hardship is very difficult for most borrowers.
9 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|3.69% – 10.94%1||Undergraduate, Graduate, and Parents||Visit CollegeAve|
|3.97% – 12.97%3||Undergraduate and Graduate||Visit Ascent|
|4.34% – 12.99%2||Undergraduate and Graduate||Visit Discover|
|4.12% – 10.98%*,4||Undergraduate and Graduate||Visit SallieMae|
|5.03% – 11.23%5||Undergraduate and Graduate||Visit PNC|
|4.00% – 13.00%6||Undergraduate and Graduate||Visit SunTrust|
|4.72% – 9.81%7||Undergraduate and Graduate||Visit LendKey|
|3.72% – 9.68%8||Undergraduate, Graduate, and Parents||Visit CommonBond|
|4.19% – 12.06%9||Undergraduate, Graduate, and Parents||Visit Citizens|