How do I pay for college?


College can be expensive both in money and time. There are some ways to reduce the financial costs, and virtually anyone can afford to go to college. Cost, though, is a key factor in deciding where to go to college as prices vary a great deal.

In addition to the cost of tuition and fees, college includes an opportunity cost. The hours spent in class and studying could be spent working. Attending college full-time is like working a full-time job. Typically, this means if you are working more than a few hours a week, you will need to go to college part-time. This further means it will take you that much longer to earn a degree. Going half-time means not graduating for 8-10 years versus 4-5 years. Students who do work more hours and try to study as well are at greater risk of dropping-out. It can be done, but it is not easy.

Almost everyone can find a way to pay for college using student loans and grants. The risk is graduating with substantial loans that must be repaid that make it difficult to buy a house or pay other bills.

A long time ago, I had the choice between a very nice private liberal arts college and a state university that was considerably less. I did the math, and the difference would help pay for grad school. I opted for the state university. I don’t regret that decision, and I was fortunate that my parents had the resources to pay for my undergraduate studies. College was also cheaper back then.

My rule of thumb is that you should not borrow more for college than you would for a car. If you can afford that Tesla, go for it. If you can afford a used Honda Civic, go for that.

Here are things to consider:

1. Do you hope to pursue a career that will involve grad school? Not only will that be more money for school, but it matters more where you goes to grad school than it does undergrad.

2. Unless you go into a career like accounting or engineering where you start earning a decent salary right away, the loans will be a challenge upon graduation. It will be harder to choose a job that is important to you for reasons other than money or to start a business.

Private schools offer on average a 50% tuition discount. You can shop around to see what college will give her a better deal. It is possible that a college with a high published cost might be less than a public university.

Some neighboring states may have lower tuition than schools in your own state. It is important to shop around.

Community college for a year or two also reduces the total cost of degree significantly.

Federal student loans for dependent students are limited. If you are claimed on your parent’s taxes, you will not have as many federal loans as someone who is independent. As a dependent student, you can either ask your parents to take out parental loans or co-sign loans with you. If you do this, your parents should take out a life insurance policy on you with enough coverage to pay off the loans. If something happens to you, then they won’t be stuck with your loans.

Financial Aid

Some fortunate students have the money (or their family has the money) to pay cash for school, including not just tuition and fees, but room and board and textbooks.

For everyone else, there is financial aid. Financial aid is a big and complicated topic and largely beyond the scope of this book, but it is important to address a few basic ideas.

First, financial aid can come from multiple sources. This section is very specific to the context of the United States and may or may not resemble the experience in other countries.

The federal government provides a significant amount of financial aid. This includes grants that do not have to be paid back (think of these as government scholarships) and student loans. How much aid you can receive and of what type depends on your financial status (how much money you make and how much money you have in the bank and other factors). It matters whether you are a dependent of your parents or if you are independent. An independent student can take out more federal loans than a dependent student. At the time of this writing, any student can receive federal student loans (with a few exceptions) regardless of credit. Even if you could not qualify for a credit card or a car loan, the government will loan you money to go to school. The federal government also provides financial aid for veterans and government employees including active duty military.

Another source of financial aid are state governments. These programs vary by state. Often they are “need based,” which means they go to students with less personal and financial resources to attend college. States also directly fund public colleges and universities, which means lower tuition rates for state residents. Displaced workers may also have access to state grants for college.

Colleges and universities also have institutional aid which are scholarships that the school pays for out of their own budgets. These can be need-based or merit-based where they are awarded to students with high grades and test scores or who participate in athletics. Some scholarships are funded by alumni or other friends of the school who have established a fund for a particular purpose such as students who graduated from a specific high school. Some institutional aid will be automatically granted to students, and other aid you will need to apply for. One of the purposes of the financial aid office is to help identify potential sources of aid.

While some people set-up scholarships with specific schools, other scholarships can be used at any school. I met someone who received a scholarship for red heads. I need to find this one, because five of my ten children are red heads. Schools may have information on some of these, but many scholarships you will need to track down on your own.

Employers often offer tuition assistance as a job benefit. Even companies with part-time employees such as Walmart, McDonalds, Starbucks, and Manpower have college programs. I was personally involved in creating a program with Manpower where their temporary employees could earn an undergraduate degree with no out-of-pocket expense. Companies are using these programs not just to reward existing employees. They are often designed to attract and retain employees. It might be worthwhile to look for employment with a company that offers educational benefits.

In addition to federal loans, there are also private loans for college expenses. These loans are like car and home loans and borrowers must meet eligibility requirements. Unlike other loans, these loans can rarely be wiped out even in bankruptcy. They are an option, but an option that should be exercised with caution.

In summary, there are many ways to get money to pay for college. You will need to talk to the financial aid office at your school about options, and you may need to do some additional research on scholarships from other sources and through employers.

Loan Limits

My strong recommendation is that you should plan on finishing your undergraduate degree with zero debt. First, many students whether they graduate or not discover large monthly payments after graduation. At the same time, when you are just starting out in a career, starting salaries can be low. Student loans may limit your options of where you can work, whether you can start a business, or if you can buy a house.

Student loans are deceptive. You do not usually have to pay while you are in school, so they are easy to ignore until you are no longer in school. This can

lead to a big change from not having any payments to have a very large payment.

The other risk with student loans is that you can take out more than just the tuition, fees, books, and direct costs for school. In the short-term, the additional loan money seems like a windfall. You can pay rent, buy nice things for yourself and your family, but when you are no longer in school that extra money will go away and will need to be paid back. This means you will take a double hit on your cash flow.

Also, if you attend graduate school, you may need loans then. Taking out undergraduate student loans will limit your flexibility later in that regard as well.

The best approach is not to use loans at all. If you do use loans, you should request only enough money to pay for tuition, fees, and books. The key to achieving this is to maximize on other sources of financial aid and minimize the expense of college in the first place.

Transfer credit and prior learning assessment

One way to reduce the costs of college is to earn credit before starting college.

For high school students, there are Advanced Placement (AP) courses that are taken in high school and then an exam is taken that can be used for college credit. It is possible to earn credit for a semester or more this way.

In many states, high school students can also take duel enrollment classes. These are college classes taught in the high school for credit for both high school and college. Some states cover the costs, though in others there are tuition charges. I have heard of students who graduated college before graduating from high school. This varies by state and locality, but it is an option that can reduce the time and money spent on college.

For those of us who are out of high school, there are still options for advanced credit. Rather than Advanced Placement exams, there are CLEP and DANTES exams that anyone can take for a small fee. Many colleges will accept scores from these exams for college credit.

If you have military experience, many colleges will accept military training for credit for courses. Even if you are not in the military, many colleges offer prior learning assessment (PLA) that will give you credit for certifications, workplace training, and even your work experience. These policies and programs vary. Some schools do not charge while others do, though it is almost always less than tuition.
Credits that you earned at one college can also be transferred to a new school. The policies depend on the new school, and unfortunately not all colleges are transfer friendly. Transfer credit is one of the most frustrating aspects of higher education. The institution receiving the credit is the one that decides what if any credits are accepted and what they are used for. Schools may give a preliminary review and then reverse it later.

The key strategy with these forms of credit is to shop around to different colleges. Look into policies and ask for a preliminary review of your credits. A difference of one course being counted or not can be worth a $1000 or more.

Community College

The first year of college is the hardest. Most people who drop-out do so in the first year. I believe that the main issue is that students start college without a clear purpose, and quickly exit when the experience of college fails to provide value.

One way to mitigate this risk is to start at a community college. This will be much less expensive than a four-year college. If you cannot be successful at the community college, you would not be successful at a four-year college.

Community college tuition is usually the most affordable college tuition. Starting at the community college, and then transferring to another college or university will reduce the total cost of a bachelor’s degree by almost half. When you add room and board of living on campus versus living at home and commuting, the savings can be even greater.

Community college courses are usually smaller and taught by professors in contrast to most public universities where courses can be large lectures and courses taught by teaching assistants.

If your purpose is college for a career, community colleges typically have a variety of career programs than can be completed within a year or two. In many places the community college may have specialty programs aligned to local employer needs. These programs maybe the only feeder into certain careers and employers.

Often community colleges have been viewed as last options. This is an unfair perspective. In many cases, community college are the best choice for a student. This is especially true for career programs that are often not available at four-year institutions.

Hacks for Majors

One way to “hack” your college education to save money and time is to look at alternative career paths that require less education to achieve similar outcomes.

Nursing vs Doctor

To become a medical doctor requires a bachelor’s degree plus three years of medical school and a minimum of three years in residency. That is a minimum of ten years of education. In contract, to become a nurse’s assistant requires a CENA that is covered in 1-2 courses. A licensed practical nurse requires 1-2 years of study, a registered nurse a two-year degree. A Bachelor of Science in nursing can be earned while working. Now a nurse will not make what a doctor makes, but a nurse will start working sooner and with less debt. More importantly, a nurse can go to grad school and within a year or two add qualifications such as nurse anesthesiologist or nurse practitioner. These credentials command very attractive salaries without the time or expense of medical school or the expense of malpractice insurance. A Doctor of Nursing is almost as prestigious as an MD with less time and money. We have a shortage of MSNs, which we need in higher ed to teach other nurses.


Also, if you discover you hate sick people, you can do something else without investing years of school. You can also argue emotionally than nurses are more engaged with patient care than doctors. With uncertainty about changes in medical care and government regulation, being a doctor might not be a great option in the future. Even now, nurses are taking on a larger role in medicine.

Plus, you can always apply to medical school after graduating as a nurse. Nursing offers more flexibility and opportunity than just going to medical school.

In addition to nursing, there are a variety of healthcare professions that lead to fulfilling work with education that ranges from a one-year certificate to a master’s degree. When we think about healthcare we tend to think about doctors and nurses and not respiratory therapists or x-ray technicians.

Counseling vs Psychology

Many people have a desire to help others. The traditional path is to go medical school to become a psychiatrist or earn a doctorate in psychology to become a therapist. Both options are long and expensive.

The alternative is to pursue a master’s in counseling. These programs are typically two-three years after a bachelor’s degree. There are online options available. At the end of the program, you will be able to counsel and work with clients. Therapists make more money, but they will also be paying more for their education.

Other Careers

If you have your heart and mind set on a specific career, it is worthwhile to research what alternative careers exist that lead to similar work with less educational requirements. You can always go back to school to earn more degrees, and the quicker you get out of school and to work, the quicker you are fulfilling your purpose.

Key Questions

When considering how to pay for college, think about these questions:

  • How much can I afford to spend out-of-pocket?
  • How much financial can I expect to receive?
  • What will be the cost of tuition, fees, books, and materials?
  • What can my employer provide in tuition assistance? 
  • How can I reduce the expense of college?

Your goal should be to not use any student loans. With that in mind, you need to know how much you can afford to pay for school. It maybe that you have no savings or discretionary income, which does not mean you cannot or should not go to school, it just means that you need to be even more strategic in your approach.


The amount of financial aid will vary in part by school. Do not assume that the published rate is what you will pay. Private, non-profit schools may offer scholarships. Also, schools may keep tuition low and have significant fees. Make sure you know the full price of attending. Shop around for the best deal. Even online, prices can vary a great deal. My wife attended a public college out-of-state that had low tuition for their online programs. Even when studying on campus, schools out of state might be cheaper than state schools in state.

Make sure you find out what your employer will provide for tuition assistance. Also check with your parents’ and spouse’s employers as they may have family benefits. You might want to look at changing jobs or getting a second job for the educational benefits. You might also consider the National Guard or Reserves.

Finally, you will want to consider your options for reducing the expense. What courses can you earn prior learning credit? (Remember to check with schools you are looking at in advance as what they accept is different.) Should you go to a community college for a year or two? Is there another program that will lead to a similar career?

Cost should almost never be a barrier to going to college. However, it can have a significant influence on where you should go. More expensive is not always better.