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How to Pay for College

a student puts college savings money in a jar

What is the cost of college? It may seem like a simple question, but the answer is surprisingly complex. How much it costs to go to college can depend on a wide range of factors, from the state where you live and the type of school you choose to attend to your student status and your annual income.

To help you better understand how the cost of college is distributed, let's start with some overall cost statistics at the national level. Here's a rundown of in-state tuition and fees costs by type of institution for the 2018-19 school year, as reported by the College Board:

  • Nonprofit four-year institutions, private: $36,830
  • Nonprofit four-year institutions, public: $10,230
  • Nonprofit two-year institutions, public: $3,660
  • For-profit four-year institutions, 120-credit bachelor's degree: $77,640
  • For-profit two-year institutions, 60-credit associate degree: $36,060

One thing you'll notice from this list is that the cost of college is generally much lower at nonprofit institutions than at schools that educate students for profit. The good news, however, is that the vast majority of universities in the U.S. are either public or private nonprofit schools, so you should be able to avoid the sky-high costs of a for-profit education.

Resident vs. non-resident tuition

There are some stark contrasts between tuition charges for resident and non-resident students, as well. Here's a quick breakdown of the difference, using College Board data:

  • The average non-resident tuition and fees amount at public four-year schools was $26,290 in 2018-19, approximately 250 percent of published in-state costs.
  • In ten states, non-resident tuition prices were more than three times as high as the average cost for in-state residents.
  • Just seven states published non-resident costs that were less than twice the average expense for resident students.

Now, those figures don't mean that you're forced to stay in your home state for college if you want to save money on your education. Most state regulations require just one year of continued residency before you can be considered an in-state student, and individual colleges may have the ability to award in-state tuition rates to non-resident state students on a case-by-case basis.

Non-tuition costs for college students

Tuition and fees might be the most significant single expense on the balance sheet for a year of college, but attendance costs aren't the only thing to consider when calculating your higher education budget. Textbooks, supplies, housing, food, transportation, and communication expenses like Internet and satellite service bills all contribute to the total cost of your education.

Here's some data on the average amounts spent on housing and food by students at different types of institution:

  • Nonprofit four-year colleges, private: $11,680
  • Nonprofit four-year colleges, public: $11,140
  • Nonprofit two-year colleges, public: $8,660

The average cost of books and supplies for an in-state undergraduate student at a four-year public university is just shy of $1,300, according to the College Board. What you'll pay for these essential course materials can vary quite a bit, based on factors such as the number of credits you take per semester and whether or not you're enrolled in a highly specialized major.

How to Pay for College

Unless you have access to a large college fund or other private wealth, chances are you'll be looking for ways of making college more affordable. Financial aid for college is the most common approach, with programs available at the federal, state and institutional levels, but there are other things to consider as well. We've got a full rundown below.

Financial aid for college

College Board numbers show that undergraduate students were awarded an average of $14,790 in financial aid during the 2017-18 school year. Here's how that number breaks down into the different types of aid available:

  • Grant and scholarship awards: $8,970
  • Federal loans: $4,510
  • Education tax credits and deductions: $1,240
  • Federal work-study funds: $70

Much of that grant and scholarship money and every dollar of federal loan funding is accessible through the Free Application for Federal Student Aid, or FAFSA. Some private loans may be available as well, but federal loans tend to have lower interest rates and usually represent a smarter borrowing decision. Check out our guide to the FAFSA for more information on how to access federal financial aid for college.

Scholarships are most often awarded at the state or university level. Most scholarship programs are merit-based, requiring that students keep their GPA at or above a certain threshold of success, and some come with additional restrictions based on a student's income, demographic data or chosen major. Our scholarship database can help you find ways of making college more affordable that come from sources other than the federal government.

Federal Work-Study

We should take a minute to explain one of the numbers in the listing above. The $70 annual average that comes from federal work-study can be misleading — it isn't intended to convey that each student who applies for federal aid is awarded that small amount.

Work-study jobs are in limited supply, and they can often only be awarded to students whose chosen course of study matches up with an employment need on campus or in the surrounding community. The per-student average is only so small because the percentage of students awarded work-study funds is small in comparison to the national student body as a whole.

Here's some more information about federal work-study from the U.S. Department of Education's Federal Student Aid office.

Other ways of making college more affordable

  • Employment-based tuition assistance. Some employers may offer tuition reimbursement or other education incentives to their employees. If you're a working adult wondering how to pay for college, it's a good idea to check with the human resources department at your workplace and find out about any college-related benefits that might be available. There are usually some restrictions, such as the program you pursue being relevant to the company's mission, but it can be a big help if it's available.
  • Student loan repayment assistance. This amenity is part of a new trend in employment benefits, so it may not be available everywhere, but it can go a long way toward handling your post-college debt. Federal government agencies offer the most attractive loan repayment benefits — up to $10,000 per year in some cases — but more and more private companies are beginning to offer them as well.
  • 529 College Savings Plans. States and educational institutions administrate these savings plans, which allow future students or their parents to set aside money for school and gain some tax benefit in the process. Contributions to 529 plans aren't tax deductible in the traditional way, but money that's been put into a 529 is typically not subject to state or federal income tax.
  • Education tax breaks. Federal tax breaks for students come in two forms: credits and deductions. Deductions lower your amount of taxable income, while credits directly reduce the amount of tax you owe. Here's an example of each:
  • American Opportunity Tax Credit. Students who aren't considered dependents for tax purposes can claim this credit, which offers up to $2,500 in tax assistance on yearly education expenses of $4,000 or more.
  • Student Loan Interest Deduction. This helpful program allows you to deduct up to $2,500 in paid student loan interest from your total taxable income for a given year.
  • Tuition exchange agreements. Some states or individual schools participate in agreements that allow them to provide tuition breaks for non-resident students or offer courses typically only available at out-of-state schools. If you live in a state like Vermont or New Hampshire, where the highest average college costs were found in 2018-19, tuition exchange agreements may help you find a lower-cost option in another state.

Think outside the box

In addition to program-based initiatives that provide financial aid for college, students can take the cost of their college education into their own hands by adjusting their approach to fit their budget. Try these tips if you're hoping to keep your college costs as low as possible:

  • Live off campus. In many cities and college towns, living off campus — especially with a roommate or two — can cost less than paying for an on-campus housing plan.
  • Go car-free. Campus parking bills can add up, not to mention the cost of maintenance services and keeping gas in the tank. Most colleges offer some sort of public mass transit option for students, and you can walk or bike to class if you live close enough to school.
  • Buy textbooks wisely. Used versions of your required textbooks are likely to be available, either online or in your campus bookstore. Previous editions are often deeply discounted and typically work just as well in entry-level classes. If you get your books at your campus bookstore, don't forget to sell them back at the end of the year.
  • Look into 2+2 plans. You may have noticed earlier that the average cost of a year of school at a two-year institution is roughly one-third what university students pay. Completing the first two years of your bachelor's plan at a local community college and transferring to a university can save you around $6,700 per year on average.
  • Inquire about online options. Enrolling in an online degree program is another way to keep the cost of college to a minimum. Online study usually comes with lower transportation costs, fewer campus use fees in your tuition bill and less of a disruption to your regular working life, so you may be able to continue making the same salary you're used to while you go to school.
  • Consider career education. If you're going to college for the specific purpose of getting a stable, well-paying job, you might want to consider a career or technical education program instead. Some of the fastest-growing jobs in the country are available with trade school credentials, and the average cost to completion of vocational programs is far lower than that of academic bachelor's degrees.

Resources for Making College More Affordable

  • The Federal Student Aid office of the U.S. Department of Education offers a wealth of information on federal aid programs, including eligibility details, different types of aid and tips for repaying your loans.
  • The College Affordability and Transparency Center is another U.S. Department of Education initiative that provides detailed info on college affordability and cost comparison tools for students and parents.
  • Students considering a 529 Savings Plan can get the answers to numerous common questions from the Internal Revenue Service.
  • Our resource hubs for community colleges and online schools can help you better understand the affordable options available through those avenues.
  • For information on student loan forgiveness and other after-the-fact ways of making college more affordable, check out the U.S. Department of Education's loan forgiveness info portal.
Article Sources
Article Sources
  • The College Board, accessed September 27, 2019: Trends in College Pricing 2018, https://research.collegeboard.org/pdf/trends-college-pricing-2018-full-report.pdf; Trends in Student Aid 2018, https://research.collegeboard.org/pdf/trends-student-aid-2018-full-report.pdf; Quick Guide: College Costs, BigFuture, https://bigfuture.collegeboard.org/pay-for-college/college-costs/quick-guide-college-costs; Average net price by sector over time, https://research.collegeboard.org/trends/college-pricing/figures-tables/average-net-price-sector-over-time;
  • Federal Student Aid, U.S. Department of Education, accessed September 27, 2019: Federal Work-Study, https://studentaid.ed.gov/sa/types/work-study;
  • Forbes, accessed September 27, 2019: For-Profit Schools Can Cost $466 More Per Credit — But Rarely Pay Off, February 28, 2017, Andrew Josuwelt, https://www.forbes.com/sites/andrewjosuweit/2017/02/28/for-profit-schools-can-cost-466-per-credit/; Student Loan Repayment is the Hottest Employee Benefit of 2018, October 18, 2018, Zack Friedman, https://www.forbes.com/sites/zackfriedman/2018/10/18/student-loan-repayment-employee-benefits/;
  • These Companies Offer Student Loan Repayment Assistance, The College Investor, accessed September 27, 2019, https://thecollegeinvestor.com/18398/companies-offer-student-loan-repayment-assistance/
  • Student Loan Repayment, U.S. Office of Personnel Management, accessed September 27, 2019, https://www.opm.gov/policy-data-oversight/pay-leave/student-loan-repayment/
  • 529 Plans: Questions and Answers, Internal Revenue Service, accessed September 27, 2019, https://www.irs.gov/newsroom/529-plans-questions-and-answers
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