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

By Ted Vrountas | Published on March 9, 2026

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Figuring out how to pay for college can seem daunting, especially considering how high the costs are. These days, the sticker price of a four-year college education can be anywhere from $27,000 per year for an in-state public college to more than $58,000 to attend a private college.

Fortunately, only a fraction of students end up paying that full sticker price, according to data from the Brookings Institute. That’s because there’s a lot of financial aid available to help bring costs down to a manageable level. The only trick is knowing where to look. Here’s how to pay for college without missing aid critical opportunities—or taking on undue debt.

Key takeaways

• There are many ways to get free money to pay for college.
• The first thing you should do is fill out the FAFSA. This will tell you how much your family should expect to pay out of pocket after receiving need-based aid.
• Before taking on student loan debt, you should exhaust all other options — like doing a scholarship search and looking into grant opportunities.
• If you do take on loans, make sure you have a firm plan for how you’re going to pay them back.

1. Fill out a FAFSA

Filling out the Free Application for Federal Student Aid (FAFSA) should be every student’s first step on the journey to paying for college. The government uses this form to assess your family’s finances and determine how much you should expect to put toward the cost of college.

On the FAFSA, you’ll have to indicate how much you and your parents each have in college savings. That could include checking account balances, savings account balances, or the contents of a 529 college fund. The FAFSA will determine your eligibility for federal work-study programs, need-based financial aid awards, and student loans from the U.S. Department of Education. That includes both subsidized and unsubsidized loans.

Your college will use the information from your FAFSA to craft your award letter, which explains the cost of your college education after any grants or scholarships.

Be sure to fill out the FAFSA as soon as possible, even if you don’t think you’ll be awarded much. The results could surprise you. Plus, the FAFSA isn’t just used for federal aid. Filling it out will also put you in the running for various state and institutional awards — many of which are given out on a first-come, first-serve basis.

2. Search for scholarships

Scholarships are monetary awards given to students to help them pay for their higher education. Unlike student loans, scholarships never have to be repaid. Scholarships can come from a range of sources, including colleges, universities, nonprofit organizations, private companies, and government agencies. Typically, they’re awarded based either on merit or on financial need.

Merit-based scholarships reward students who have achieved a certain level of success during their high school or college years. “Success” can be anything from maintaining a high GPA to helping the community through volunteerism.

Need-based scholarships, on the other hand, are designed to help disadvantaged students pay for school by awarding them the money they need to close otherwise insurmountable funding gaps. A number of need-based scholarships have no GPA requirement; instead, they consider a student’s financial circumstances, work ethic, and future potential.

But just because you don’t fit neatly into either of these two categories doesn’t mean you’re ineligible for scholarships. There are hundreds of award programs out there, many of which cater to students who demonstrate talent, passion, or interest in a variety of subject areas. Online search platforms allow you to search for funding opportunities based on your hobbies, course of study, or hometown.

3. Apply for federal grants

Depending on your family situation, you may be eligible for federal gift aid — a type of financial aid that does not have to be repaid as long as you fulfill the terms of the grant. (In some cases, you may owe part or all of the money back if you do not complete your program.)

There are four main kinds of federal grants:

• Federal Pell Grants: These grants are for undergraduate students with exceptional financial need.
• Federal Supplemental Educational Opportunity Grant (FSEOG): Pell Grant recipients at some colleges may also be eligible for FSEOG grants for an additional up to $4,000 per year.
• Teacher Education Assistance for College and Higher Education (TEACH): This teacher-specific grant provides up to $3,772 to undergrad and grad students in programs designed to prepare them to teach in high-need fields.
• Iraq and Afghanistan Service Grant: This fund provides aid to students whose parent(s) died in military service in Iraq or Afghanistan after 9/11, and who are not eligible for Pell Grants.

Note that you’ll need to fill out the FAFSA to qualify for any of these grants.

4. Ask your parents for help

About 83% of parents help their college students cover at least some costs, whether that’s for tuition, living expenses, or application fees. If you haven’t had the finance discussion with your parents yet, ask them to help you come up with a plan to pay for school.

It’s possible they may have a college savings plan, or that they’re planning to use part of their yearly income or savings to pay for your tuition fees in full. There are also certain tax credits for having children enrolled in college, so your parents may also be able to pass these savings on to you to help cover some costs throughout the school year.

Remember, every family has a different financial situation, and yours may be able to help you more or less than your friends’ parents can. The best place to start is by having an open conversation.

5. Enroll in a payment plan

Many colleges have tuition payment plans you can enroll in so that you can spread out the cost of your college tuition across smaller payments throughout the year. Each school has different policies around this, so be sure to ask the financial aid office or bursar’s office how to set it up and whether there are any extra fees.

You may be able to do a payment plan for all or part of your tuition. For example, let’s say your first year costs $20,000 and you have loans to cover half ($10,000), plus $5,000 from your parents. You have a little bit of your own savings from a summer job, and you’re planning to work on campus to earn money throughout the year. So, instead of spending all your cash at once, you decide to set up a payment plan to make 10 installments of $500 each*. This gives you a little more flexibility with how you spend your money throughout the year.

*The example above is for illustrative purposes only. Individual results vary.

6. Exhaust your other non-loan options

There’s a lot you can do to minimize your student debt, but you’ll likely have to make some sacrifices. These might range from simply sticking to a budget or living off-campus — to choosing an entirely different school. Here are some ways to avoid taking out federal and private loans:

• Work a part-time job
• Make a budget and stick to it
• Take a gap year and work to save tuition money
• Pick a more affordable school
• Go to a “non-loan school”
• Consider in-state schools, which are typically less expensive than out-of-state schools
• Look for regional exchange programs or out-of-state tuition waivers
• Live off-campus to avoid high room and board costs
• Live with friends or family to save money on rent
• Commute to a satellite campus
• Go to a trade school
• Complete core courses at a community college and then transfer
• Earn college credit by signing up for College Board AP Tests
• Look for employer assistance programs

No matter how far you’re willing to go to avoid debt, you’ll likely still end up needing student loans to pay for college. More than half of students end up borrowing money at least once during their college career, and the average student borrows more than $30,000 to afford a bachelor’s degree.

7. Take out federal student loans

If you’ve done everything you can to avoid debt but still need to cover some education expenses, it may be time to consider student loans. Most students turn to federal loans first. Unlike private student loans, federal student loans don’t require a credit check. That means you won’t ever need a cosigner or a high credit score to qualify. Federal loans also offer fixed interest rates and generous borrower protections. These include:

• Student loan forgiveness programs, like Public Service Loan Forgiveness (PSLF) and teacher forgiveness.
• Access to income-driven repayment plans, which can help borrowers adjust their monthly loan payments according to their income.
• Forbearance and deferment options, which offer relief to borrowers experiencing hardship by putting a temporary pause on student loan payments.

There are three main types of federal loans:

• Direct Subsidized Loans are for undergraduate borrowers who demonstrate financial need. The amount you can borrow is determined by the school, and it can’t exceed your financial need. With Direct Subsidized Loans, the federal government is responsible for paying interest while the borrower is in school at least half-time, in their six-month grace period after graduation, or in a deferment period.

• Direct Unsubsidized Loans are available to both graduate and undergraduate students. Unlike with subsidized loans, there’s no requirement to demonstrate financial need, and the borrower is always responsible for paying accrued interest. If you don’t pay the interest down during school, it will capitalize. In other words, it will be added to the principal balance of your loan once you begin repayment.

• Direct PLUS Loans are available to grad students and parents of dependent students. Graduate students can qualify for Grad PLUS Loans, while parents can take out Parent PLUS Loans. Unlike the other two types of federal loans, which have borrowing limits, Direct PLUS Loans can be used to cover the full cost of attendance at a qualifying college or university. However, PLUS Loans can be expensive. And unlike the other federal loans in this list, Direct PLUS Loans do require a credit check. If you have a poor credit history, you may need an endorser to qualify.

8. Borrow private student loans

Federal loans come with fixed interest rates, repayment flexibility, and robust borrower protections. However, they aren’t always enough to cover your full cost of attendance. If you find you still need money for college expenses like tuition, textbooks, and room and board, you may decide to turn to private student loans to fill in the gaps.

Private student loans are offered by independent lenders unaffiliated with the federal government. As a result, they are all unsubsidized, and each has their own policies. Fees, repayment terms, rates, grace periods, deferment and forbearance options –– these are all at the discretion of the lender.

Unlike federal student loans that offer the same interest rates to all students, private student loan rates are based on creditworthiness. If you have a good credit history, consistent income, and little debt, you’ll likely be eligible for a lender’s lowest rates. And even if you don’t, you can always plan to refinance your loans at a lower rate later when your financial circumstances improve.

Learn more about student loans from Earnest

Many students receive their financial aid package only to realize they still need more money. Student loans are a common way to help fill funding gaps. If you’ve exhausted your scholarship opportunities and federal loan options, private loans could be your next best bet.

Earnest strives to streamline the student loan process for borrowers of all backgrounds. We offer custom loan terms, flexible payment options, no fees, and a 9-month grace period after graduation — that’s three months more than the industry average. Find out how much you could save today with our free student loan calculator.

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Ted Vrountas

Ted Vrountas is a freelance content manager with more than a decade of experience. In addition to managing a team of writers, he writes and edits content on personal finance topics like student loans, refinancing, debt consolidation, and money management. His goal is to help readers create a future where they don't have to stress about finances.

Disclaimer

This blog post provides personal finance educational information, and it is not intended to provide legal, financial, or tax advice.