Updated 10/24
A college education can provide the foundation for long-term earning potential in your career. According to the U.S. Bureau of Labor Statistics, in 2023, the median usual weekly earnings for those with a bachelor’s degree were $1,493, compared to $899 for those with a high school diploma, no degree. That’s an annual difference of $30,888. Imagine the difference over decades.
Unfortunately, the cost of college tuition is still high. According to the latest data from the National Center for Education Statistics (NCES), in the 2022-2023 school year, the average annual tuition, room and board and fee rates for full-time undergraduate students in public college were $9,800.
The good news is, there are plenty of ways to cover college costs without taking out a loan or paying a significant amount out of pocket. Many students pay their entire college tuition through gift aid like grants and scholarships.
Use this guide to learn how to pay for college and compare your options for funding your education.
Complete the FAFSA Application
FAFSA stands for Free Application for Federal Student Aid. The first step to gain access to federal grants, state government financial aid, various scholarships and federal student loans is to complete this application.
The FAFSA shows the federal government your level of financial need based on your and your family’s unique financial situation. After you’ve completed the FAFSA, you may be eligible for:
- Grants: A form of financial aid, typically need-based, that doesn’t have to be repaid
- Scholarships: A form of financial aid that may be need-based or merit-based, that doesn’t have to be repaid
- Work-study jobs: Which students work part-time during school to earn money
- Loans: A form of financial aid that’s borrowed and must be paid back, along with interest
- Aid for military families: For students for serving in the military or for being the child or spouse of a veteran
- Aid for international study: For students studying at a school outside the United States
To complete the FAFSA, you’ll need personal information, including the following, as well as your parent(s)’ information if you’re a dependent:
- Social Security number
- Alien registration number, if you’re not a U.S. citizen
- Bank statements and investment records
- Records of untaxed income
- Federal income tax returns, W-2s and records of money earned from 2 years prior
The FAFSA has various deadlines for both federal aid eligibility and state aid eligibility. Each college will have its own deadline for aid specific to the college or university. States will have varying deadlines, as well. Check the FAFSA website for the most up-to-date deadlines.
Apply for Scholarships
Scholarships can be some of the best ways to fund your education. According to Sallie Mae, 80% of families used scholarships to cover 27% of education costs in the 2023-2024 academic year.
There are thousands of scholarships available, based on criteria like:
- Ethnicity
- High school achievements
- GPA
- Athletic ability
- Religion
- Volunteerism
- Participation in various organizations
Some scholarships are location-based. For example, the Arizona Central Credit Union CU Succeed Scholarship is a $2,000 scholarship for Arizona college and trade school students eligible for renewal each year.
There are also scholarships for really unique niche interests. For example, you could win a scholarship to pay for school by designing your own prom wear or promoting vegetarianism.
Some scholarships, including ones available via specific colleges, are need-based. Colleges and universities may require you to fill out the FAFSA before you can become eligible for their scholarships.
To maximize your ability to use scholarships to pay for school, research scholarships as early as possible to see what you’re eligible for. Some may require essays or recommendations, so a head start can enable you to apply for more scholarships.
Use Grants if You Qualify
Once you complete the FAFSA, you’ll get a list of grants you qualify for. Grants are great options for paying for college because you don’t need to pay them back. Since they’re need-based, you likely won’t have to submit extra materials like an essay or resume.
Another benefit of grants is that if you receive extra money beyond what you need for tuition, fees and housing, you may be able to get a refund as a check in the mail. You can use that money however you want, to cover college costs like books and meals.
The maximum amount of the Federal Pell Grant Award is $7,395 for the 2024-25 award year. According to the National College Attainment Network, more than $4 billion in Pell Grants went unused in 2023 due to unsubmitted FAFSA applications.
You can’t get grants like these without applying. Avoid leaving money on the table by applying for the FAFSA.
Determine if Additional Funds Are Needed
If you’ve applied for the FAFSA and scholarships, but you still need help paying for school, another option to pay for school is to take out a student loan. Student loans typically have low fixed interest rates. You’ll know exactly how much you’ll owe back without the risk of rates going up over time.
Most federal student loans are also eligible for at least one income-driven repayment plan. In some cases, if your income is low enough, your payment may be as little as $0 a month.
To be eligible for a federal student loan, you’ll need to fill out the FAFSA. One type of federal student loan is a Direct Subsidized Loan. These are loans that are available to undergraduate students who have demonstrated financial need. You’ll need to pay the loan back, but it has some advantageous terms. For example, the U.S. Department of Education covers the interest on the loan while you’re in school at least half-time and for the first six months after you leave school.
The federal government also provides Direct Unsubsidized Loans, which don’t have a financial need requirement. Students and graduates are responsible for paying the interest on these loans during all periods.
If you’re considering federal student loans, it might be better to get a Direct Subsidized Loan or Direct Unsubsidized Loan as the student, rather than have your parents take out a loan, which is called a Direct PLUS Loan. Direct PLUS Loans tend to have higher interest rates than student loans. For example, in 2024, the fixed rate for Direct Subsidized Loans and Direct Unsubsidized Loans for undergraduate students was 6.53%. For Direct PLUS Loans, the rate was 9.08%.
There are also private student loans available from financial institutions like Arizona Central Credit Union. With private loans, each lender sets its own terms.
Private loans may have variable or fixed interest rates that are lower than federal loan rates. It can pay to compare your student loan options.
Choose an Affordable School
School choice can also affect your yearly costs since certain schools tend to have higher price tags. The most affordable schools tend to be public, in-state, 2-year colleges. Attending a private, 4-year college out-of-state tends to be more expensive.
According to the College Board, the following types of colleges had the corresponding average published yearly tuition and fees.
- Public 2-Year College (in-district students): $3,860
- Public 4-Year College (in-state students): $10,940
- Public 4-Year College (out-of-state students): $28,240
- Private 4-Year College: $39,400
Using these stats, the average student who attends community college in-state and then transfers to a 4-year college in-state could save $14,160.
If you want to attend a specific school, research scholarships that the school offers. Apply if you’re eligible to save more potentially.
Fund Your College Experience With AZCCU
With scholarships, grants and student loans available to pay for school, you have diverse options to save on college costs. Attending college can help students increase their earning and career potential long-term. A college education can be a smart investment for your or your child’s future.
Learn more about how to improve your credit score if you’re interested in taking out a loan for yourself or your family to pay for college. We’ll also help you with other things students should know, such as effective money management and financial literacy. You can also plan to save for college with our College Savings Calculator.
If you have questions about student loans, contact us online or call (866) 264-6421.
