How To Pay For College 2022: Seven Ways To Finance Your Education

Published on January 22, 2023 · Updated on April 22, 2023

How To Pay For College 2022: Seven Ways To Finance Your Education

Published on January 22, 2023 · Updated on April 22, 2023

A college degree is a smart investment in your future. According to a 2020 Bureau of Labor Statistics report, individuals with a bachelor’s degree earned a median salary of $1,248 a week, compared to $746 a week for those with a high school diploma.

The lifetime payoff of a college degree is unquestionable, but the costs of financing your education can be staggering. In late 2021, the Education Data Initiative reported that students used financial aid to pay for 92% of their college education, with 84% of students receiving some form of financial aid.

While it’s nice to know you’re not alone in wondering how to pay for college, an explanation of the resources available to you is even more helpful. Here’s what you need to know about how to pay for college in 2022.


Forget SATs and GREs. When it comes to your college education, FAFSA may be the most important acronym you ever hear. It stands for Free Application for Federal Student Aid, and it refers to $150 billion in grants, loans, and work-study available through the federal government. Every form of federal student aid offered via FAFSA offers advantages: grants do not need to be repaid at all, while loans are offered at low-interest rates. Even the work-study programs offer advantages, as students are provided a guaranteed way to defray the costs of their education while also earning valuable work experience.

Importantly, an enormous percentage of students fail to even fill out the FAFSA application, thinking that their household income is too high to qualify, but there is no income cut off.

Submission of the FAFSA form is time-sensitive. Though the application window lasts for nine months, aid distribution is generally offered on a first-come, first-served basis, and with the economic impact of COVID continuing to affect America’s families, more people are likely to be submitting applications than ever before. Completing the form and sending it in quickly should be a top priority.

To learn more, check out our ultimate guide to the FAFSA.

2. Federal Student Loans

There are a few different types of loans available to students and their parents/guardians by the federal government. They are:

Provided to students with demonstrated financial need at no interest while they are attending school at least half-time, during deferment, or during a grace period.
Provided to students without regard to financial need. The amount is based on the cost of attendance and the amount of any other financial aid that the student receives. Interest is charged throughout the life of the loan, and any interest that is unpaid is added to the principal amount of the loan.
Unsubsidized loans for parents of dependent students and graduate/professional students. These are credit-based and available up to the cost of attendance for each year after all other financial aid received by the student has been exhausted. Interested is charged throughout the life of the loan, and any interest that is unpaid is added to the principal amount of the loan.

Federal loans should always be pursued before private loans, as they offer several important advantages. Students and others who have a poor credit history (or who lack a credit history entirely) are eligible and do not need a cosigner. They are also flexible, allowing you to revise payment terms if needed, or to adjust your repayment schedule based on salary.

Federal student loans are only available by submitting the FAFSA. Not every school makes federal student loans available, and the available amounts of both direct subsidized and unsubsidized loans are limited to an amount that is reviewed each year.

3. Private Student Loans

Private loans are offered through banks and other private lenders and their rates depend on the credit history of the person taking out the loan as well as the type of repayment plan selected. Borrowers can be either the student’s parent or the student themselves, though student signees often require a cosigner. Borrowers can choose either a variable rate loan or a fixed-rate loan, and loans can be taken out for as much money as the borrower qualifies for.

Comparing rates and terms for multiple private loans is a smart thing to do, but keep in mind that doing so will count as a credit inquiry and can potentially impact your credit rating. To minimize this effect, try to keep all of your inquiries within a 30-day period so that it only counts as a single inquiry.

Private student loans can be used to pay for all college costs, whether the student is studying full time or part-time, living on or off-campus, or attending undergraduate or graduate school.

To identify the most reputable private lenders, check to see whether your school suggests specific lenders. Be sure to compare interest rates and terms, as well as whether there are any hidden fees or the option to renegotiate terms or payment plans.

4. Scholarships

Scholarships are high on everyone’s wish list for funding college, but being selected as a recipient is often a competitive process, and it is rare for a student to accrue enough scholarship money to fully cover their college expenses. Still, scholarships can provide significant help, and have the obvious advantage of not having to be repaid.

Scholarships can be offered by both expected and unexpected sources. While colleges and universities top the list, they are also funded by charities and foundations, governments, businesses, clubs, and small organizations. Some individuals offer scholarships to students who may share similar backgrounds or goals that they once did.

While institutional scholarships are often provided by schools as part of the acceptance process (and may be based on academic or athletic merit), private scholarships generally require going through an application process. Scholarship amounts can be as modest as $100 or as generous as tens of thousands of dollars. There are no limitations to which expenses scholarship funds can be allocated; in most cases, a check is made out to the recipient for them to do with as they wish.

If you’re interested in finding scholarships that you qualify for, check out our scholarship search.

5. Grants

Grants are a form of financial aid that recipients do not need to repay. They are similar to scholarships, with the biggest difference being that in most cases grants are provided on the basis of need rather than merit, membership in a specific group, participation in a particular activity, or field of study. Most grants are bestowed by colleges and universities or are government-funded and awarded in response to the information submitted on the FAFSA.

The criteria used to determine qualification for a grant are usually based on the Expected Family Contribution (EFC) to the cost of attendance, and this is calculated by evaluating family income, makeup, and status; the cost of tuition at the school the student will attend; and other factors such as disability status. Academic achievement and other merit factors may also be considered.

The single largest grant program in the country is the Federal Pell Grant program, which provides 25% of grants awarded every year. Though the application process for grants is simple and straightforward and students may qualify for and receive more than one grant, the funding is generally limited and rarely covers all of the costs of attending college.

6. Work-Study

When filling out the FAFSA, you’ll be asked to indicate whether you are interested in a work-study award. This form of financial aid is awarded based on financial need and is useful for helping to pay for out-of-pocket college expenses like books or other living expenses. Approximately 3,400 colleges and universities participate in the program, which is funded by the Department of Education.

Involvement in work-study represents a win-win for both the student receiving the award and the school itself. The federal government provides a significant portion of the compensation that students will receive for working in positions that the school needs to be filled. This means that the school gets the benefit of filling open positions while having the government provide a large portion of the pay that the student receives.

In recent years, work-study awards paid an average of over $2,500 per school year to recipients, so the income can make a big difference in the student’s quality of life. Each work-study award designates a set amount for service, administration, research, or teaching roles. Some positions are available off-campus, but these must involve public service and are usually at public agencies or nonprofit organizations.  

As is true of other forms of aid facilitated through FAFSA, it is important that students hoping for work-study aid submit the form as early as possible as schools have limited work-study openings, and the awards are limited and distributed on a first-come, first-served basis.

7. Fellowships

Fellowships are like scholarships in that both are forms of financial aid that are merit-based and do not need to be repaid by the recipient. Though the terms can be used interchangeably, fellowships are generally reserved for graduate school, and usually, award higher dollar amounts than scholarships. Fellowships also frequently include a commitment of work, an internship, or research for a specified period of time.

Choose an Affordable School

In a perfect world, you’d be able to choose the perfect school based on whatever attribute is most important to you like prestige, location, campus atmosphere, or athletic prowess. But unless you have significant funds or are comfortable with taking on very high debt, it makes sense to choose a college based on its affordability.

When considering a college, be realistic about costs. Take the time to add up tuition, fees, room, and board, as well as the additional expenses associated with campus life and traveling to and from the school. After you’ve done the math, look at how much financial aid you’re likely to be eligible for, as the difference represents the amount of debt you’ll have to take on.

Then, consider the sacrifices you’ll have to make in the future in order to pay off that debt and think hard about whether it will be worth what you gain for your priority attribute. Affordable schools provide excellent education and can make a great deal of economic sense.

Do I Have to Pay Back College Financing?

Whether repayment is expected depends entirely on the type of financial aid that you receive. Grants, scholarships, and fellowships are all provided with no expectation that the amount of money will be paid back, while both federal and private loans carry a specific obligation to pay them back in full.

In some instances, graduates can become eligible for student loan forgiveness, though these cases are rare and often require working for several years while making consistent payments toward your loan.