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If college bills are looming and you don’t have enough money saved, you have plenty of company: Roughly half of families don't have a plan to pay for college before their student enrolls, according to student loan company Sallie Mae.
But you also have options for making a degree more affordable. Here are some ways to pay for college with no savings — and avoid crushing debt.
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Borrow loans, but set limits
Start with financial aid that doesn't have to be repaid — like scholarships, grants and work-study — then exhaust federal student loans in the student's name if you don't have money for college, Students typically can borrow up to $5,500 in federal student loans for their first year of college and a total of $31,000 for an undergraduate education.
That likely won't be enough to pay for the typical college education. The average published cost for tuition and fees at a public, four-year college was $10,560 annually for in-state students in 2020-21, according to the College Board. Those costs are higher for out-of-state students and private institutions.
The federal PLUS loan program allows parents to borrow the full price of virtually any college education. That’s rarely a good idea. It’s much smarter to decide before applying for schools how much parents can and want to contribute. In general, parents should limit borrowing to what they can afford to pay off before retirement, while still being able to save for that retirement.
» MORE: Best parent loans for college: parent PLUS and private
Apply to financial 'safety,' 'target' and 'reach' schools
College counselors typically recommend applying for three types of schools, based on the student’s academic credentials: “safety” schools virtually certain to say yes, “target” colleges likely to accept them and “reach” options where acceptance is a long shot.
Families also should also include at least one financial “safety” school — a college with costs they know they can handle — as well as “target” schools that could be affordable and a “reach” school that may surprise them with generous financial aid. The net price calculators available on every college’s site can help identify likely candidates.
Consider alternatives
It’s a lot to ask 17- and 18-year-olds to decide what they want to do for the rest of their lives. Dithering is expensive, though — especially if you don't have much saved to begin with. Most colleges have career counselors who can help students sort through their options, and internships can offer real-world glimpses of future career paths.
Not every career path will require a four-year degree. An alternate education pathway, like an apprenticeship program or coding bootcamp, may be a better fit for some students.
» MORE: Alternatives to college: What are your options?
For those who'll need a four-year degree, a year or two of community college can significantly cut costs — but also may increase a student’s risk of dropping out. Community college may be best for self-motivated types who are determined to get a degree and who can do the legwork in advance to ensure their credits will transfer to the desired four-year institution.
For those who aren’t that motivated or are unsure what they want to study, a gap year may be a good option. They’ll have another year to grow up and get focused, without racking up college expenses. They could even get a job to pay some of those costs.
Trim expenses and tap assets
Here are some additional strategies to help pay for college with no savings:
Cut discretionary expenses. This can free up money for college bills. The usual suspects: eating out less, buying used instead of new, vacationing cheaply, combing your bills for “leaks” such as memberships or subscriptions you’re not using. If your student is attending college more than 100 miles away and won’t have a car, your auto insurer may give you an away-from-home discount.
Take advantage of tax breaks. Education tax credits, such as the American Opportunity or Lifetime Learning credit, also may help if you don't have money for college.
Sell nonretirement investments and other assets. This can help pay for college while possibly increasing financial aid in future years. (While federal financial aid formulas typically ignore retirement funds, money in savings and brokerage accounts reduces need-based aid.) Consult a tax pro first, since asset sales can have tax consequences.
Don’t pause retirement contributions, however. You can’t get back the tax breaks and company matches you’ll lose, or the future tax-deferred earnings that money could have earned. Retirement is even more expensive than a college education, and few of us can afford to stop saving for that goal.
This article was written by NerdWallet and was originally published by The Associated Press.
FAQs
The rising costs of college education have made saving for college more challenging. Some options to help with paying for college include applying for scholarships and grants, looking into work-study options, cutting costs and applying for loans.
How to pay for college if you have no savings? ›
The rising costs of college education have made saving for college more challenging. Some options to help with paying for college include applying for scholarships and grants, looking into work-study options, cutting costs and applying for loans.
How do I pay for college if FAFSA doesn't cover everything? ›
Request Additional Federal Student Loans
If you've exhausted other options and still need additional funds to help you pay for school, contact your school's financial aid office to find out if you're eligible for additional federal student loans.
What if I don't have enough money for college? ›
Grants, work-study funds, loans, and scholarships help make college or career school affordable. Financial aid can come from federal, state, school, and private sources to help you pay for college or career school. Learn more about the different types of financial aid.
What is a way to pay for college without having to repay back the money? ›
Unlike loans, grants are free money that can be used to pay for school. Grants usually come from the state, government or the college you are attending. Completing the Free Application for Federal Student Aid (FAFSA) is a great starting point if you are in need of financial aid for college.
How to afford college when you're broke? ›
How to Pay for College When You Don't Have Money in 10 Steps
- Apply for scholarships. ...
- Apply for in-state public college. ...
- Check whether you fill out the FAFSA as an independent student. ...
- Apply to need-blind schools that meet 100% of demonstrated need. ...
- Get a work-study or campus job. ...
- Make a strong budget. ...
- Save money on housing.
Financial aid can come from federal and state governments, colleges, and private organizations. Some help comes in the form of loans, which have to be paid back. Grants, scholarships and work-study programs do not have to be repaid. Broadly, there are two types of financial aid: need-based and merit.
How to pay for school if you can't get a loan? ›
- Submit an appeal. ...
- Ask about tuition payment plans. ...
- Search for independent scholarships and grants. ...
- Crowdfund your education costs. ...
- Discuss parent PLUS loans with your family. ...
- Consider work-study programs. ...
- Consider private student loans.
The financial aid awarded based on the FAFSA can be used to pay for the college's full cost of attendance, which includes tuition and fees. While it is possible for student financial aid to cover full tuition, in practice it will fall short.
How do I pay for college if my FAFSA is denied? ›
There may still be ways to pay for college if financial aid isn't enough. Scholarships, grants, part-time jobs and private student loans can all help cover the gap—or you might choose to attend a more affordable college.
Along with applying for scholarships, you'll want to make sure you apply for grants and federal work study programs to help you cover college costs like tuition, room and board, and books and supplies. And to do that, you'll need to complete the Free Application for Financial Student Aid, or FAFSA®.
How does anyone afford to go to college? ›
Most undergrads have help from parents to pay for college. Many also receive grants, borrow student loans, or work part time.
How many people do not go to college because they Cannot afford it? ›
51.04% of students drop out because they cannot pay for college (What to Become, 2021).
What happens if you never pay for college? ›
Failing to pay your student loan within 90 days classifies the debt as delinquent, which means your credit rating will take a hit. After 270 days, the student loan is in default and may then be transferred to a collection agency. Keeping up with your student loan payments helps improve your credit score.
What does Dave Ramsey say about paying for college? ›
Dave Ramsey urges parents to save for college in some circ*mstances. However, he thinks it's more important to take care of your own needs first, including saving for retirement. Ramsey's advice is important for parents to consider because their kids can find other ways to pay for college if need be.
What two types of college assistance do not have to be repaid? ›
Grants and work-study don't require reimbursem*nt. Federal student loans, on the other hand, are borrowed from the federal government and must be repaid, usually with interest.
How to go through college with no money? ›
Here's how to pay for college without loans.
- Search for scholarships. ...
- Apply for financial aid and grants. ...
- Consider community college or trade school first. ...
- Negotiate with your school. ...
- Get a work-study job. ...
- Cut your housing costs. ...
- Attend a tuition-free college or university. ...
- Research income-share agreements.
Apply for scholarships and grants
Unlike student loans, college scholarships and grants don't have to be repaid — which makes them a great way to pay for school. There's no limit to how many scholarships and grants you can get, so it's a good idea to apply for as many as you can.
What to do if you run out of money in college? ›
What to do if you run out of financial aid before the semester
- Step 1: Contact your financial aid office. ...
- Step 2: Make sure you filed FAFSA. ...
- Step 3: Apply for scholarships and grants. ...
- Step 4: Get a part-time job. ...
- Step 5: Consider reducing your credits. ...
- Step 6: Apply for private student loans.
