A 5-step parent’s guide to paying for college in 2025 | Earnest

How to pay for college in 2025: A 5-step guide for parents

By Sasha Bulatskaya | Published on March 11, 2026

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Today, sending your children to college can overwhelm even the most resourceful parent. You must choose the best school and figure out how to pay for their college tuition once they get their acceptance letter. Taking care of your child’s college education is the most stressful part of planning for almost any parent.

The average family contributes $11,862 to their kids’ college education in one academic year. At 39 percent, that contribution makes up the bulk of a student’s financial support in addition to scholarships, grants, college savings plans, and student income. Considering that the cost of college has risen a whopping 747.8 percent since 1963, it’s crucial to have a roadmap when planning for their higher education.

In this five-step guide, we’ll discuss a financial game plan for every stage of your child’s life—from starting a college savings account to financial aid applications in high school, and sources of free funding.

When they’re young: Start a 529 college savings plan

A 529 Savings Plan is a high-yield investment plan that allows you to save for their future education. One of the most significant benefits of a 529 plan is that your earnings grow tax-free, and withdrawals for qualified education expenses are also tax-free. Many states offer additional tax incentives for residents who contribute to their state’s plan.

The average student now takes six years rather than four years to complete a Bachelor’s degree, making college even more expensive. But, parents who sign up for a savings plan early can give their children a financial safety net.

How to open a 529 savings plan for your child

The process for opening a 529 plan can typically be done online in a matter of minutes, depending on the type of plan you select. Here’s how it works:

  1. Choose a 529 Plan: First things first, research and compare different 529 plans to find one that best suits your needs. You can look for the best plan online and sign up on your own, or if you prefer to work with a financial advisor, they can help you select a plan. When signing up for a plan, consider the minimum contributions, fees, and investment performance. You’ll likely want a plan with low fees and steady returns on investments.
  2. Gather your documents: Keep essential details on hand, such as your child’s Social Security number, birthdate, and personal information.
  3. Select your contributions: Decide how much you want to contribute and set up automatic contributions.
  4. Designate a beneficiary: When setting up the account, you’ll need to designate your child as the beneficiary. If you’re opening the account before your child is born, designate yourself as beneficiary.
  5. Monitor and adjust: Keep track of your 529 plan’s performance and make adjustments as needed. You can modify your investment options to align with your saving goals.

When they’re in high school: Focus on financial aid

Let’s start with a crucial first step in financing your child’s education: understanding financial aid. Financial aid can come from various sources, including the federal government, state government, colleges, and private organizations. It’s designed to help bridge the gap between the cost of attendance and the college expenses your family can afford to pay.

Here’s what you’ll need to do in order of importance:

Step 1: Fill out the FAFSA

The Free Application for Federal Student Aid, better known as FAFSA is the most important financial aid document your child needs to fill out. It’s used to determine a student’s eligibility for federal, state, and institutional aid, including grants, work-study programs, and loans.

The U.S. Department of Education usually opens the FAFSA application in October for the following academic year. FAFSA funds are on a first-come, first-served basis, so getting your application in early can help your child get more funds.

To get started on the FAFSA you’ll want to:

  1. Go to studentaid.gov and create an FSA ID and password
  2. Use the FSA ID and password to complete the FAFSA application

FAFSA has no income requirements

Even if you’re a high-income earner, your child should still fill out the FAFSA to access aid. The FAFSA prioritizes need-based aid, and families with greater financial need may get more aid, but other types of aid, like federal student loans, are available to all students.

Step 2: Apply for state financial aid

The federal government isn’t your student’s only route to financial aid. Most states offer financial aid to college students, but you’ll need to check your state website for eligibility and application requirements. Some states go off the FAFSA application, and others have their own set of forms you’ll need to fill out.

Step 3: Exploring scholarships

Scholarships are essentially free money for college that doesn’t need to be repaid. They can be awarded based on academic achievement, extracurricular activities, community involvement, and sometimes even quirky talents. Encourage your child to cast a wide net and apply for as many scholarships as possible.

Step 4: Navigating federal student loans

Federal student loans can be a helpful part of the college finance puzzle, offering fixed interest rates and flexible repayment options. Borrowers are shielded by federal protections, like income-driven repayment plans and access to student loan forgiveness programs.

Federal student loans include:

Step 5: Understanding private student loans

Private student loans are offered by banks, credit unions, and other financial institutions and can help bridge the gap when federal aid and scholarships aren’t enough. It’s also important to note that over 90% of undergraduate students need a cosigner in order to be eligible for a private loan.

Things to look for in a private student loan:

At Earnest, we answer our customer calls in under 2 minutes, and over 90% of people have a positive experience with our team. In 2024, CNBC named us one of The World’s Top Fintech Companies. You can check your rate before you apply. If approved, select the rate, payment, and term combination that works best for you and your student.

Bonus: Teach budget skills before they go

Teaching your child indispensable personal finance skills can help them navigate the financial responsibilities of college life. Sit down with them and create a realistic monthly budget that includes expenses like tuition, housing, meal plans, textbooks, and personal expenses. Encourage them to look for part-time jobs and to be mindful of their spending.

You can help them reach their goals

Navigating the financial aspects of college can seem daunting, but with the right knowledge and support, you and your child can confidently tackle it together. Remember, you’re not alone in this journey. Reach out to the college’s financial aid office for guidance or consider consulting a trusted financial advisor. This way, you’ll help them get their college degree without unnecessary stress.

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About the Author

Sasha Bulatskaya

Sasha is the Senior Manager of Brand and Content at Earnest. She has been writing for ten years and has been focused on educational finance and financial aid for over three. Her passion for mission-driven companies brought her to Earnest in 2020, and she's been helping make student finance more accessible ever since. She strives to demystify personal finance and student loans to help borrowers make the best decisions for their financial situation.

Disclaimer

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