How to Get Money to Pay for College Expenses

Higher education costs present a significant financial challenge for many students and their families. While paying for college can seem daunting, resources and strategies exist to manage these expenses. Understanding funding avenues and planning can make college more accessible. This article explores ways to secure financial assistance for educational pursuits.

Federal Student Aid Application

A primary step in securing college funds is completing the Free Application for Federal Student Aid (FAFSA). This form is the gateway to federal grants, loans, and work-study programs, and is often required for state and institutional aid. FAFSA information helps determine a student’s eligibility for need-based and non-need-based financial assistance.

To complete the FAFSA, students and their families need to gather financial documents. These include Social Security numbers for the student and parents, federal income tax returns (W-2 forms and 1040s), and records of untaxed income. Current balances of cash, savings, and checking accounts are also necessary, along with the net worth of investments, businesses, and farms. Non-U.S. citizens need an Alien Registration Number (A-Number).

Access the official FAFSA form only through StudentAid.gov. The FAFSA is free to complete; any website requesting payment is not official. Most financial information can be directly transferred from the IRS, simplifying the process for many applicants.

Determining dependency status is a key aspect of completing the FAFSA. This status dictates whose financial information must be reported: only the student’s (and spouse’s, if applicable) or both the student’s and parents’. Students are generally considered independent if they meet criteria such as:
Being 24 years old or older by January 1st of the academic year
Being married
Being a graduate student
Serving in the U.S. Armed Forces
Having legal dependents
Being an orphan or ward of the court
Being an emancipated minor
Being an unaccompanied homeless youth

If a student does not meet independent criteria, they are considered a dependent student for federal financial aid purposes, even if they do not live with their parents or are not claimed on their parents’ tax returns. The FAFSA requires financial information of the custodial parent(s), and if remarried, the stepparent’s information. After submission, applicants receive a Student Aid Report (SAR), which summarizes the information provided. The FAFSA must be completed annually for each academic year.

Types of Financial Assistance

After FAFSA processing, students may be eligible for various forms of financial assistance. These aid types help cover educational expenses, each with distinct characteristics and repayment requirements. Understanding these differences is crucial for financial planning.

Grants

Grants are “free money” that does not need to be repaid. Federal grants, such as the Pell Grant and Federal Supplemental Educational Opportunity Grant (FSEOG), are awarded based on financial need. The Pell Grant is available to undergraduate students with a low expected family contribution. Institutional grants, offered by colleges, may also be awarded based on need or other criteria.

Scholarships

Scholarships also provide funds that do not require repayment. They are often awarded based on criteria including academic achievement, artistic talent, athletic ability, specific fields of study, community involvement, or unique personal backgrounds. Unlike some grants, scholarships may not always be solely dependent on financial need, though many consider it. They help reduce the overall cost of education.

Federal Student Loans

Federal student loans are funds borrowed from the government that must be repaid with interest. Several types of federal loans exist, each with different terms. Direct Subsidized Loans are available to undergraduate students who demonstrate financial need. The government pays interest on these loans while the student is enrolled at least half-time, during the grace period after leaving school, and during deferment. This feature can reduce the total amount repaid.

Direct Unsubsidized Loans are available to undergraduate and graduate students, regardless of financial need. Unlike subsidized loans, interest accrues from disbursement, and the borrower is responsible for all interest. Payments are not required until after the student leaves school or drops below half-time enrollment. Direct PLUS Loans are federal loans for graduate or professional students (Grad PLUS) and parents of dependent undergraduate students (Parent PLUS). PLUS loan eligibility often requires a credit check, but is not based on financial need. Federal student loans generally offer fixed interest rates and more flexible repayment options than private loans.

Federal Work-Study (FWS)

Federal Work-Study (FWS) allows eligible students to earn money through part-time employment to pay for educational expenses. These jobs can be on-campus or off-campus with federal, state, local public agencies, or private non-profit organizations. Work-study positions are awarded based on financial need and are designed to complement a student’s academic program or career goals. Students are paid at least the federal minimum wage; earnings are provided directly to the student, not automatically applied to tuition.

Additional Funding Sources

Beyond federal financial aid, other avenues can help students cover college costs. Exploring these additional funding sources can reduce the financial burden of higher education.

Private Scholarships

Private scholarships are a source of non-repayable funds, offered by various non-governmental organizations. These include online scholarship databases, local community groups, foundations, and corporate sponsorships. Securing these scholarships often involves thorough research, adhering to application requirements, and submitting essays that highlight personal achievements, experiences, and future aspirations. Competition for private scholarships can be significant, so apply to multiple opportunities.

Private Student Loans

Private student loans, offered by banks, credit unions, and other private lenders, are another funding option. These differ from federal loans, typically having variable interest rates that can fluctuate and often requiring a credit check. Borrowers with limited or no credit history may need a co-signer, such as a parent or another creditworthy individual. Repayment terms for private loans are generally less flexible than federal loans, with fewer options for income-driven repayment plans or deferment.

Personal Savings and Investments

Personal savings and investments play a significant role in funding college. Dedicated college savings plans, such as 529 plans, offer tax advantages. Contributions to 529 plans grow tax-free, and qualified withdrawals for eligible education expenses are also tax-free at the federal level. Qualified expenses include tuition and fees, room and board (for students enrolled at least half-time), books, supplies, and equipment. Up to $10,000 annually per student can be used for K-12 tuition, and a lifetime limit of $10,000 per individual can be used for student loan repayment.

Coverdell Education Savings Account (ESA)

The Coverdell Education Savings Account (ESA) is another savings vehicle. Similar to 529 plans, contributions are not tax-deductible, but earnings grow tax-free, and withdrawals are tax-free if used for qualified education expenses. Coverdell ESAs have an annual contribution limit of $2,000 per beneficiary and are subject to income limitations. Coverdell ESAs can cover a broader range of K-12 expenses beyond tuition, including books, supplies, equipment, and academic tutoring. Funds must be used by the time the beneficiary reaches age 30.

Employer Tuition Assistance Programs

Employer tuition assistance programs provide valuable support for employees pursuing higher education. Many companies offer benefits such as tuition reimbursement or direct payment for courses, often with conditions like maintaining a certain grade point average or remaining with the company for a specified period. Employees should consult their human resources department to understand program terms and eligibility.

Military Educational Benefits

Military service offers significant educational benefits. The GI Bill, encompassing programs like the Post-9/11 GI Bill and the Montgomery GI Bill, helps qualifying veterans and their family members cover costs such as tuition, fees, housing, and books. These benefits provide substantial financial assistance based on service history. Reserve Officers’ Training Corps (ROTC) programs offer scholarships in exchange for a service commitment after graduation, covering tuition and other educational expenses.