How to Pay for College: A Step-by-Step Guide

The total cost of attending college can vary widely based on the type of school you choose, how many years you spend there, and how much financial aid – including scholarships and grants – you receive. However, it’s key that you plan ahead – college costs, especially tuition and fees, add up fast. This is true if you attend a state college or university, but it’s even more palpable if you decide to attend a school that’s private or out-of-state.

For example, the College Board reported that the average cost of tuition only for public four-year, in-state schools was $10,940 for the 2022-23 school year, which increased by $190 from the previous year. Meanwhile, tuition and fees for public out-of-state four-year schools came in at $28,240. Remember, these figures are per year, and they don’t include room and board.

If you want to prepare for the cost of higher education, it can help to have a plan of attack early on. Here’s a rundown of the five main steps you’ll need to take to plan for these costs, whether you decide to attend a school that’s in-state, out-of-state, or take courses at a community college for a few years.

Step 1: Complete the FAFSA Early

The Free Application for Federal Student Aid (FAFSA) is a form every college student needs to fill out to determine their eligibility for federal financial aid, including federal student loans and grants. It can also be used to determine eligibility for state-based and institutional financial aid. Some aid is first come, first served, so you don’t want to miss it.

You can start filling out the FAFSA form after October 1st each year, and it’s due on June 30th. This means that, for the 2023-24 academic year, the FAFSA form is due on June 30, 2024, at 11:59 p.m. CST.

Step 2: Apply for Scholarships and Grants

Although filing the FAFSA is the only way to figure out how much federal aid you’ll qualify for, you can also apply for scholarships and grants. While the process can vary widely depending on the organization offering the scholarship, many require applicants to write a basic essay and fill out a formal application to apply.

Where can you search for college scholarships? Additional funding is available through colleges and universities, professional associations, employers, large companies, community organizations, and beyond. College Ave Student Loans even offers a $1,000 scholarship for one lucky winner per month.

To find scholarships you might be eligible for, start your search by using the following platforms:

Step 3: Assess and Compare Total College Costs

Once you apply for scholarships and financial aid, you should have a general idea of how much assistance you’ll have to help pay for college. From there, you can check the Net Price Calculator (NPC) for each school you’re considering, so you can estimate your out-of-pocket costs.

These calculators take all kinds of factors into account, including how much aid you qualify for, where you plan to live (or your current residency), annual household income, and more. This is where you might be surprised by what you find. For example, more expensive schools might offer more financial aid that makes the cost of attendance considerably lower in the end. Conversely, you might find that you’d benefit from attending a public state school with more affordable tuition and fees.

Once you assess and compare this information across all the schools you’re considering, you will be in a better position to make an informed decision. And remember, you’ll have an easier time funding higher education if you start your search with a mix of schools at different price points to compare costs.

Step 4: Consider Savings and Income

Once you know how much aid you’ll receive and the total cost of tuition and fees at the school you want to attend, you can get a ballpark figure of how much you’ll need to pay out-of-pocket each year. This amount is important – it will help you decide if it’s feasible depending on your financial situation and will help you determine if you need to rely on student loans to get through school.

This is where your savings and income come into play. For example, you will want to consider how much your household income is each year, how much savings you have stashed away for school and what the difference is. If you believe you’re eligible for $12,000 in financial aid and scholarship money each year, but tuition, fees, room, and board currently cost $21,000 annually at schools you want to attend, you should mentally prepare to cover $9,000 per year in higher education costs – or $36,000 in expenses for a four-year degree.

If you can’t, you can fill in funding gaps with student loans. Either way, it helps to have a general idea of how you’ll use your income and savings to pay for school, and how much extra funding you need to come up with.

Step 5: Consider Alternative Funding Sources

Now that you know how much additional funding you’ll need for school, you can look at other financial aid options. It’s possible you may have funds stashed away in a 529 college savings plan, or that a parent or grandparent has been setting aside money for college tuition in a savings account the last few years.

Depending on how much extra time you have to put into the process, there are even more options to consider. For example, parents could pick up a side hustle or part-time job to build up more cash to pay for school. In fact, a recent College Ave Student Loans’ survey showed that 35% of families expected their student to work during college to help cover bills and living expenses.

In other scenarios, you may turn to student loans for help. While federal student loans in the student’s name are the first choice, (they have fixed interest rates and may come with subsidized interest while you earn an undergraduate degree) they do have annual limits. As a result, some students may rely on private student loans to fill the gap.

Either way, the key to responsibly taking out loans for college is by borrowing only what you need and selecting a loan with competitive rates and terms. You’ll also want to use a student loan calculator to make sure you have a good chance at being able to afford the minimum payment after you graduate and get your first job.

The Bottom Line

Higher education is an investment in your future, and the costs can be surprising. However, it’s possible to manage these expenses if you start planning early and taking advantage of all the funding sources available to you. This can include federal and state-based aid, institutional student aid, scholarships, grants, and more.

Student loans can fill in the gaps from there, but families should work together to pick an affordable school in the first place and take steps to minimize borrowing. Time spent in college may be memorable, but families don’t get a do-over. Paying for school responsibly lets families get their kids to graduation without any regrets.


Which product best suits you?

Interested in building your credit?

Set sights on a brighter financial future by establishing a positive credit history easily and safely with Ambition Card.

Ambition Card by College Ave
Find My Application