8 ways to pay for college

One of the biggest questions students and their parents face as they plan for college is, “How am I going to pay for it?” From scholarships to grants, college savings plans to student loans, there are many different options available, but it can be confusing to know where to start. With that in mind, here’s a quick rundown of eight tried-and-true strategies for solving the “paying for college” puzzle.

Let’s talk federal grants. A federal grant is free financial aid from the U.S. Department of Education that is awarded to students and families based on their financial needs. Federal grants don’t have to be repaid, which is a huge help. However, students must qualify.

To apply, go ahead and first submit the Free Application for Federal Student Aid (FAFSA) form. Your FAFSA is reviewed to determine the degree of your financial need. You’ll be notified of any grants you received in your financial aid offer. There are different types of grants to look for, the most well known being Pell Grants. Others are Federal Supplemental Educational Opportunity Grants, Teacher Education Assistance for College and Higher Education Grants, and Iraq and Afghanistan Service Grants. You'll have to fill out a FAFSA every year to apply for federal aid.

While uncommon, there are instances when you would have to repay a federal grant, such as if you withdraw from school for the year the grant was awarded, so be sure to understand the terms of your federal aid. But by and large, federal grants are free financial aid to help pay for college.

Just like grants, scholarships are free aid that don't need to be repaid, although there may be other obligations associated with them. The difference is scholarships are distributed based on merit or other factors, not financial need.

Merit-based scholarships are offered by a college based on prior academic performance — like your grade point average or standardized test scores — and determined when the school reviews your college application.

Various organizations also offer private scholarships. Some scholarships have general qualifications that draw in a high volume of applicants; others have specific qualifications with a much smaller pool of applicants. For example, certain private scholarships are available only to students who are eligible for a Federal Pell Grant. But there are plenty of opportunities that are less specific. At Citizens, you could enter to win our annual $15,000 scholarship towards school expenses.* No purchase necessary. You can learn more here.

The Federal Work-Study Program is another form of federal financial aid. The program provides part-time jobs to students so they can earn money while paying for education expenses. If awarded, students will work at either an on-campus or off-campus job and make at least the federal minimum wage, up to the maximum amount of the award.

Students will receive payment from the school at least once a month. They must be paid directly, unless the student requests that funds go directly to their bank account or back to the school to cover education expenses. The FAFSA application will determine whether you qualify for a work-study program. Note: Jobs aren't guaranteed; you'll need to search and apply for work-study positions on your own. If you aren't awarded work study initially, you can always go back to the financial aid office to see if other students declined their awards, and if it has other options available during the semester.

There are different types of work study programs. A few common ones are:

• Tutoring: Tutoring is a great way to use the skills learned in class and apply them to helping fellow classmates. Nearly every major offers tutoring services, and it can be an easy way to apply what you're already learning for exams or papers and still earn a paycheck.
• Computer lab or library: Your university will likely have a computer lab, or computer section of the library that employs students to help with logging on, working printers, scanning and research. While most students use laptops, computer labs still offer a structured space to work and collaboration amongst peers.
• Fitness center: The fitness center on campus is often a social hub and a great place to make new friends while getting to be first in line for the treadmill. And who knows? It could even help spark an interest in exercise science or sports management down the road as a possible career.
• Research positions: Research positions are offered either from your college (such as through a professor or major’s department) or from a national organization that works directly with the school such as the National Science Foundation. If you have a passion for a particular subject, a research position is a great way to dive a little deeper into it. Here’s a little life hack: Speak with the administrative assistant for the department where your major is held. They often are treasure troves of information about research positions for undergraduates.

If a work study program isn't an option, getting a part-time job could help boost your income. And if the job is off campus, you could get to know what it's like to run a small business or feel involved in the local community. If you're a sports enthusiast, there are jobs with the athletic department that might give free tickets to games and events.

Now comes the costs you'll pay on your own. That typically starts by tapping into your college savings, most notably a 529 savings account to fund. But first, a family conversation about loan amounts could be beneficial for everyone.

Tax-free disbursements from a 529 — a state-sponsored investment plan for education costs —can help cover qualified educational expenses. Those include tuition and fees, room and board, books, and other expenses. Remember that you don't have to make a 529 disbursement every year; some years you may have all costs covered through aid and other means. In that case, keep your savings in the 529 so it could earn a return until it's time to start withdrawing.

Note: Some non-qualified disbursements could be taxed and charged a fee; also the 529 is an investment plan and may lose value, therefore, familiarize yourself with 529 rules before making a withdrawal.

Also, you or a family member may have set up other college savings gifts and accounts. Custodial accounts are another way parents or guardians save, by essentially putting money into an account until the child is of legal age. A Roth IRA is tax-free when the account holder turns 59½ and they're another popular way of offsetting college costs.

When trying to lower college costs, don't dismiss the minor changes that could add up to major savings. Here are a few additional ways to cut costs:

• Supplies: If you received a long list of books to buy for a course, consider online used book retailers.
• Roomates: Do you like having a full house? Consider inviting more than one roommate to split the rent bill for housing. Also, sometimes on-campus housing might be cheaper than renting off-campus.
• Commuting: Is public transportation an option? Or is a pre-owned car possible, rather than buying new for the commute to class? There are several ways to save on a commute to class. Even better is online learning, which can be done from home and saves on gas money!
• Aid for military Families: Is yours a military family? Both the federal government and nonprofit organizations offer college funding to qualified military veterans, future military personnel, active-duty personnel, or those related to veterans or active-duty personnel. There are even special aid programs for children of veterans.
• AmeriCorps: AmeriCorps is a national organization that works directly with nonprofit organizations to handle some of our nation's most pressing issues. Founded in 1964 initially to combat poverty, AmeriCorps now sends people and $800 million a year in funding to communities across the country. Some social justice issues it addresses are disaster relief, education, and drug crises. Incentives for serving in AmeriCorps include tuition matching, education awards, in-state tuition for alumni, and supplies such as room and board or books. To learn how to sign up to serve, go here.
• A loan from a family member: If borrowing from family, just be sure to set clear boundaries or write a contract to ensure there's no falling out when the payment is due. It could be a way for a grandparent or family member to give the gift of education. For the borrower, it's possible this family member won't charge interest and therefore help you save money over time.

Want to pay more toward your education but don’t have the savings to do so? Contact the school's financial aid or business office and set up a payment plan while you're enrolled. A payment plan allows you to make monthly payments and to continue to chip away at, or even cover, the entire remaining college cost. You’ll also pay an administration fee.

Let's say you still owe $15,000 for the first year after factoring in your federal aid and savings. You don't necessarily have to take out loans to cover the entire remaining expense. Instead, you can make monthly payments during the academic year to cover all or a portion of that $15,000. For instance, you could contribute an extra $5,000 that year by making monthly payments of $500 for 10 months. Then you'd only have to get a loan for $10,000 (instead of $15,000) to cover the balance.

Once you've exhausted all sources of free aid, college savings, and payment plan options, look at the leftover cost. What other options could be considered to help bridge the gap? It may be time to explore student loan options, starting with federal student loans.

The cost of college can be stressful and confusing. But if you do your research and get organized, you can make the best decision for your personal financial goals. While loans are a helpful way to bridge any gaps, there are other ways to afford the cost. Regardless of what you choose to do, don't forget to fill out a new FAFSA form before every academic year. We are here to help you reach your dreams. With rate discounts and flexible repayment options, find the Citizens Student Loan™ that fits your life and budget.