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Paying for College: A Guide for Families

If college is right around the corner and you're wondering how to pay for it, you're not alone! Whether you've been saving for years or you're just now figuring out how to cover costs, there are plenty of options available. The key is to use your resources wisely and in the right order to minimize debt and maximize financial aid. Let's break it all down.

Step 1: Use Free Money First (Grants & Scholarships)

Before dipping into savings or taking on debt, look for money that doesn't need to be repaid.

  • Scholarships – Many organizations offer merit-based and need-based scholarships. Check out Fastweb and Scholarships.com to find opportunities. Talk with your school guidance counselor or college financial aid office for additional tips. 
  • Grants – If your student qualifies for need-based aid, they may be eligible for grants like the Pell Grant. Start with the Free Application for Federal Student Aid (FAFSA) at FAFSA.gov.

📌 Pro Tip: Even if you think you won’t qualify for aid, fill out the FAFSA! Many schools use it to determine institutional aid. This is also how you access federal student loan money each year. See more in step 4 below.

Step 2: Tap into Savings (If You Have Them)

If you’ve saved for college, now’s the time to put that money to use—strategically.

  • 529 Plans – These tax-advantaged accounts grow tax-free for education expenses. Withdrawals for qualified expenses (tuition, fees, books, etc.) remain tax-free.
  • Coverdell ESAs – Similar to 529s but with more flexibility in investment choices.
  • UTMA/UGMA Accounts – These custodial accounts can be used for education but are considered a student asset, which may impact financial aid eligibility.

📌 Pro Tip: If you have both a 529 Plan and other cash savings, use cash first and let the 529 continue to grow tax-free as long as possible.

Step 3: Consider Work-Study & Part-Time Jobs

Encouraging your student to work during college can help cover expenses and reduce reliance on loans.

  • Federal Work-Study Program – This is based on financial need and is included in some financial aid packages.
  • Part-time jobs – Even a few hours a week can help with books and personal expenses.
    • Browse opportunities on your student’s campus job board or at Indeed.

📌 Pro Tip: Working 10-15 hours a week is typically manageable without negatively affecting academics.

Step 4: Explore Low-Cost Loan Options (If Needed)

If you need to borrow, start with the loans that have the best terms.

  1. Federal Student Loans – These should be the first option because they offer low fixed interest rates and flexible repayment options.
    • Direct Subsidized Loans (need-based, government pays interest while in school)
    • Direct Unsubsidized Loans (not need-based, interest accrues immediately)
    • Learn more: Federal Student Aid
  2. Parent PLUS Loans – Federal loans available to parents with higher borrowing limits.
  3. Private Student Loans – Use only as a last resort, as they typically have higher interest rates and fewer borrower protections.

📌 Pro Tip: Always borrow the minimum needed to cover costs to avoid excessive student debt.

Step 5: Look Into Tuition Payment Plans

Many colleges offer interest-free payment plans that allow families to spread tuition costs over several months.

📌 Pro Tip: If you can afford to pay a portion of tuition each month, this is a great way to avoid borrowing.

Step 6: Consider Alternative Paths to Reduce Costs

If college costs are overwhelming, consider these cost-saving options:

  • Community College for General Education – Many students save money by starting at a community college and transferring later.
  • AP/IB Credits – If your student took advanced coursework in high school, they might already have earned college credits.
  • In-State Public Universities – These are generally more affordable than private or out-of-state schools.
  • Gap Year with Work or Service – Some students take a year to earn money before attending college.

📌 Pro Tip: Have your student meet with an academic advisor to plan the most cost-effective path to graduation.

Final Thoughts: Have a Plan & Stay Flexible

The best way to pay for college is by layering resources in the right order:

  1. Scholarships & Grants – Free money first.
  2. Savings (529s, ESAs, etc.) – Use efficiently.
  3. Work-Study & Jobs – Minimize borrowing.
  4. Federal Student Loans – Borrow only what’s needed.
  5. Parent Loans & Private Loans – Last resort.
  6. Payment Plans – Spread costs when possible.

Planning ahead—even if college is just months away—can make a huge difference. Take advantage of every opportunity, and don’t be afraid to ask the college’s financial aid office for help. Remember, each family’s situation is unique so find the best approach for your family. However, keep in mind that the less student debt you have after college, the more options you have to put your earnings to work for other goals! Finding the balance is key. 

Got questions? Schedule a call with our team and let’s navigate this together!