It can be challenging to determine the right way to fund your college education, which is why we’ve narrowed down six ways to pay for college in 2020.
With the cost of education on the rise, it’s important to make the right decisions to get the most out of your college investment.
1. Choose the Right School
The cost of attendance (COA) is the dollar amount that colleges and universities use to refer to tuition, fees, books, supplies, living expenses, and more. It’s important to factor in the COA when deciding which college to attend because the cost can vary significantly from institution to institution.
For the 2019-2020 academic year, the average annual cost of tuition, fees, housing, and food was $30,500. The average spending depends on the institution you plan to attend (private versus public), the cost of living in that area, whether you will be an in-state student, and more.
Average Annual Cost of Attendance for 2019-2020
2-year public institution (in-state)
- $12,720 annually
- Tuition and fees: $3,730
- Room and board: $8,990
4-year public institution (in-state)
- $21,950 annually
- Tuition and fees: $10,440
- Room and board: $11,510
4-year public institution (out-of-state)
- $38,330 annually
- Tuition and fees: $26,820
- Room and board: $11,510
4-year private nonprofit institution
- $49,879 annually
- Tuition and fees: $36,880
- Room and board: $12,990
Attending a community college for the first two years can save you thousands of dollars and put you at an advantage for the next stage in your education. Additionally, if you are an in-state resident and attend a public university, you can attend college at a lower cost.
State taxes play a significant part in school funding, and residents who attend school in-state receive lower tuition rates. On the other hand, private institutions can offer generous aid packages to undergraduates with financial need, which is why it’s integral to compare your options.
2. Apply for Scholarships
Scholarships might seem too competitive and not worth trying; however, they should not be discounted. Not all scholarships are based on academics and may focus on special skills, talent, and financial need. Regardless of grades and test scores, many scholarship opportunities are available.
Many scholarship dollars go unclaimed because many people do not know that some scholarships exist, so we recommend looking into less conventional scholarship opportunities.
Scholarships can range from a few hundred dollars to the entire cost of tuition.
Who Offers Scholarships?
- State and federal governments
- Charitable foundations and nonprofit agencies
- Private donors
- Community organizations
The best part about scholarships is that you can apply and qualify for more than one scholarship at a time. Start your hunt for scholarships early so that you can take advantage of every opportunity available.
Other resources for scholarship opportunities include:
- Top Photography Scholarships for Students: Plus How to Apply
- How to Find Scholarships With an Essay Portion
- Scholarships for First-Generation Students: What’s Available in 2020?
3. Apply for Grants
The federal government, state governments, colleges, and private organizations offer grants to help pay for college. Unlike loans, grants are free money that typically does not need to be repaid.
U.S. Department of Education Grants
The U.S. Department of Education offers several grants for four-year colleges, universities, community colleges, and career schools:
- Federal Pell Grant: The Federal Pell Grant is usually awarded to undergraduate students who demonstrate exceptional financial need.
- Federal Supplemental Educational Opportunity Grant (FSEOG): This grant is offered to undergraduate students with exceptional financial need. The FSEOG program is administered directly by the financial aid office at participating schools. Check to see if the school you are interested in attending offers this type of grant, as not all schools participate.
- Iraq and Afghanistan Service Grant: This grant is available to students who have lost a parent or guardian due to their service in Iraq or Afghanistan. The Iraq and Afghanistan Service Grant has very special eligibility criteria, so make sure that you read all of the eligibility requirements.
- Teacher Education Assistance for College and Higher Education (TEACH) Grant: This grant can help students pay for college if they plan to become a teacher in a low-income area that needs educators. Please note that this grant requires you to teach for a certain period within an assigned area.
One thing to note is that all of the grants listed above are only available to students with financial aid. To qualify for financial aid, complete the Free Application for Federal Student Aid (FAFSA). If you qualify for any form of financial aid and plan to keep it, it is important to fill out the FAFSA every year that you attend school.
4. Work While Going to School
Working while attending college can offer you invaluable experiences that can put you miles ahead of your peers. Paid internships or jobs related to your future career are a great way to gain valuable insight and cover expenses.
Do you want to work in health care? Consider working as a scribe in the emergency room to get on-the-job experience. Do you plan on becoming a software engineer? Apply for paid internships that will help you pay for school while also getting the upper hand in the field.
Alternatively, you can see if your employer provides tuition reimbursement. Nowadays, many employers offer tuition reimbursement as a job benefit.
- Publix, for example, provides tuition reimbursement for employees who’ve worked for at least six months and are working toward certain degrees.
- Starbucks offers the Starbucks College Achievement Plan for employees to complete their bachelor’s degree online at Arizona State University.
- Wells Fargo offers up to $5,000 annually for eligible tuition expenses or reimbursement.
Additionally, the federal government offers work-study jobs to help students earn money to cover educational expenses. The Federal Work-Study program is available to undergraduate and graduate students. Qualifying students work part time on or off campus while enrolled in this program. The Federal Work-Study program is for students who demonstrate financial need.
Please note that not all schools participate in this program. Check with the financial aid office of the school that you would like to attend to see if they offer the Federal Work-Study program.
5. Take Advantage of the Tax Credit
The IRS offers a tax credit to qualifying individuals. Whether you are a student, spouse, or parent, you might be eligible to deduct qualifying educational expenses from the past year.
Qualified educational expenses can include tuition, borrowed funds, and more. The institution in which you are receiving an education must also be eligible. These institutions can be any college, university, or vocational school that participates in the federal student aid program. The tax credit will not cover your tuition, but it can help you receive reimbursement funds to help cover tuition.
6. Apply for Student Loans
To qualify for a student loan, you must complete the FAFSA. If you are eligible for a student loan, you will need to complete it annually to continue receiving funding.
Federal student loans are a great way to fund your education and typically have better benefits than private loans. Deciding to take out a student loan is a big step, so you should make sure that you fully understand the terms of the loan before signing.
The federal government offers several student loan options to help you fund your education:
- Direct Subsidized Loans
- To be considered for a Direct Subsidized Loan, you must be an undergraduate student.
- Please note that to be considered for this loan, you must demonstrate financial need.
- Direct Unsubsidized Loans
- Direct Unsubsidized Loans are available to eligible undergraduate, graduate, and professional students.
- Please note that eligibility for this loan is not based on financial need.
- Direct PLUS Loans
- Direct PLUS Loans are offered to graduate or professional students and parents of dependent undergraduate students.
- This loan helps cover education expenses not covered by other financial aid options.
- Applicants do not need to demonstrate financial need. However, they must complete a credit check to qualify for this loan.
Sometimes, students might need additional funds to cover their education. As a result, they might need to apply for a private student loan. It’s usually best to consider federal student loans first, as they have fixed interest rates, income-driven repayment plans, and benefits not often offered by private loans.
Private student loans are non-federal loans, which means they are through a private lender. These lenders can include a bank, credit union, state agency, or school. Most private student loans have variable interest rates, which can be higher or lower than federal interest rates.
Finding College Funding
Financially planning for college can be a burden, but with the right tools, you can pave the right way to getting the most out of your postsecondary education. Take advantage of the tips above to make the most out of your college investment.
At CollegeFinance.com, we offer various resources to help you make informed decisions about college, whether you’re planning, borrowing, or repaying.