Key Takeaways
- Grants and scholarships offer free money for college with no repayment required.
- Students should submit the FAFSA to access federal, state, and school-based aid.
- 529 plans, work-study, and employer tuition reimbursement can reduce out-of-pocket costs.
In 2020-2021, 87% of four-year college students used financial aid to pay for school. The federal student aid program provides millions of students with financial aid for college students. States, colleges, private foundations, employers, and professional organizations also provide college scholarships, grants, and other financial aid programs.
Undergraduate and graduate students can use financial aid to cover college costs like tuition, fees, and living expenses. Grants, fellowships, and scholarships offer free money for school, so students should exhaust these forms of aid before taking out student loans. Degree-seekers can also use work-study programs, employee tuition assistance programs, and 529 college savings plans to help pay for school.
Our financial aid guide reviews different types of financial aid and savings plans to help students make school more affordable.
Average Tuition Costs
The cost of college continues to rise. In 2022-2023, public four-year colleges charged around $9,750 in tuition and fees for in-state students, according to the National Center for Education Statistics. Out-of-state students paid over $28,297 in tuition and fees. Undergraduates at private institutions paid $35,248 per year, on average.However, tuition comprises only part of the cost of college. Students must also pay for things like room and board, textbooks, and graduation fees.
College students benefit from many options to decrease their education expenses. In addition to scholarships and grants, learners can choose affordable programs. For example, an online learning format may offer tuition discounts and savings on living expenses and transportation costs. Online students can also shop around for the most affordable colleges rather than limiting their search to local programs.
Financial Aid and Scholarships Common Questions
Types of Financial Aid
Paying Out of Pocket: 529 Plans
Many students pay for at least some of their college costs out of pocket. While you can save money for college in any type of bank account, some accounts offer college savings benefits. For example, a 529 plan helps families save for educational expenses.
A 529 plan offers tax advantages for educational expenses. For example, savers may qualify for tax benefits, depending on their state, and beneficiaries do not pay taxes on withdrawals used for college costs. Some states offer prepaid tuition 529 plans, allowing savers to pay current tuition rates to attend college in the future.
With over 100 options and different tax incentives depending on your state, it can feel overwhelming to find the right 529 plan to save for college. Learn more about 529 plans through our 529 plan guide.