Statistics tell us that, on average, a person with a bachelor's degree will earn approximately 66 percent
more income over the course of a typical 40-year career than a high school grad. That percentage is even higher if you take your education up a level or two and pursue a masters, doctoral, or professional degree.
While this is great news, it may be hard to wrap your mind around this prospect if you're unsure how to pay for college in the first place. Fortunately, there are many options to consider.
Use your 529 Plan or education savings account.
If you're lucky, your parents started a 529 Plan or Education Savings Account (ESA) for you when you were little, making paying for college a whole lot easier. According to Charles Schwab, as long as you use this money for qualified college expenses, it is tax-free.
What is a qualified educational expense? Things like tuition, room and board, books and supplies, and even a computer. (Always check with your own financial planner or accountant before using monies in these types of accounts to ensure that you're using them properly.)
Tap into your savings.
Certainly, not everyone has this option, but it is still one to consider if you have a sizeable amount of cash just sitting in your savings account.
Maybe you've been setting aside cash since you were a kid in anticipation of getting your education later in life, or perhaps you came across some money thanks to an inheritance or a legal money judgement.
Regardless of how you got it, even if it isn't enough to cover your entire college bill, any amount you can afford to part with (keeping some on hand in case of an emergency) can help reduce the amount you need from other sources.
Cashflow your education.
Another way to pay for college is to cashflow it. This involves working while going to school, earning enough to cover all of your schooling and living expenses.
Admittedly, this isn't always easy, especially if you're taking a full load, have a minimum-wage job, or are trying to support a family. But it is an option to consider if you're able to earn enough to get you to your degree without having to borrow.
Apply for scholarships.
One of the absolute best ways to pay for college is via scholarships. Why? Because, generally, this is money you don't have to pay back. Each scholarship has different requirements, though, so you need to do a bit of research to find the ones that apply to your individual situation and circumstances.
For instance, some scholarships are merit-based (which means that, to qualify, you must meet minimum academic requirements or have a special talent that makes you qualified to apply) and some are offered for specific groups of people or demographics (like only female students wishing to pursue a degree in science, technology, engineering, or mathematics, commonly referred to as STEM).
While the college you plan to attend can help connect you to local scholarships and grants set aside solely for that school, you can also do an online search and find them on your own as well. A few of the sites that offer this service are:
- CareerOneStop (this site is sponsored by the U.S. Department of Labor)
- Broke Scholar
Qualify for a grant.
You may also qualify for a grant through the federal government. Like with the scholarships, these are generally monies you can use to fund your education without having to worry about paying it back.
A few of the federal grants available include:
- Pell Grant
- Federal Supplemental Educational Opportunity Grant (FSEOG)
- Teacher Education Assistance for College and Higher Education (TEACH) Grant
- Iraq and Afghanistan Service Grant.
To learn if you qualify for any of these, you must apply for federal student aid. The first step in this process is to complete and submit a Free Application for Federal Student Aid (FAFSA).
If you're willing and able to work while going to school and you meet certain financial need requirements, you may also be able to use Federal Work-Study to help you pay for college.
Federal Work-Study involves working part-time, usually for your school in your specific course of study. Jobs may be on or off campus, pay is variable (but at least minimum wage), and you can't work more than the amount you were awarded.
Like with the federal grants, you must complete a Free Application for Federal Student Aid (FAFSA) to see if you qualify.
Apply for student loans.
If the previous options aren't enough to cover your education, paying for college may require that you take out a student loan. Most fall into one of three categories:
- Federal student loan – a loan given to you by the federal government
- Private student loan – a loan you secure from a private financial institution, such as a bank or credit union
- Parent PLUS loan – a federal loan your parents take out to cover your schooling costs
Should you decide to take out a student loan of any type, it's important to pay attention to when the loan must begin to be repaid and the terms of the repayment. This will help you better budget for this expense once you graduate.
More Questions about Paying for College?
If you have more questions about how to pay for college, feel free to contact Saint Leo University's Student Financial Services.
Deciding how you're going to pay for college is a big step, and we are here to walk you through the process.