We all want the best for our children. We want them to have opportunities, financial security, and the chance to pursue their goals. For many families, a college education is an important part of that future. However, with the cost of higher education continuing to rise, paying for college can be a challenge without careful planning and financial assistance.
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Options for Paying for College#
College costs vary significantly depending on the type of school your student attends. For the 2026-27 academic year, public, in-state tuition and fees are $11,747; out-of-state tuition and fees are $26,034; private ranked college and university tuition and fees are $46,973. These figures do not include room and board, books, transportation, and other expenses that can substantially increase the total cost of attendance.
If your children are still young, saving early can make a major difference. One of the most popular college savings tools is the 529 College Savings Plan, a tax-advantaged investment account designed to help families save for qualified education expenses. Earnings grow tax-free, and withdrawals used for eligible educational costs are generally not subject to federal income taxes. Many states also offer additional tax benefits.
These plans remain a popular choice among families. By the end of 2025, Americans held more than $600 billion in 529 plan assets across approximately 17.7 million accounts, demonstrating the continued value parents place on planning ahead for college expenses.
But what if college is only a year or two away and you haven’t had the opportunity to save enough? Should you tap into your retirement savings?
Financial experts generally advise against using retirement funds to pay for college. Most families already face challenges saving enough for retirement, and withdrawing money from retirement accounts can jeopardize long-term financial security. While some households may have sufficient retirement savings to assist with education costs, such decisions should be made carefully and ideally with guidance from a trusted financial professional.
Fortunately, there are many forms of financial aid available to help students and families manage college costs. Federal grants, scholarships, work-study programs, institutional aid, and student loans help millions of students attend college every year. Completing the Free Application for Federal Student Aid (FAFSA) is the first step toward accessing most forms of assistance.
What to Look for When Choosing a College#
When comparing colleges and universities, don’t focus solely on the published tuition rate. One of the most important factors to evaluate is the school’s financial aid policy.
Many colleges, including some private institutions with high tuition rates, offer generous need-based financial aid packages that can significantly reduce a student’s actual cost of attendance. In some cases, students may pay less out of pocket at a private college than they would at a public institution after grants and scholarships are applied.
Most colleges now provide online Net Price Calculators that allow families to estimate their actual costs after financial aid. Taking advantage of these tools can help families make more informed decisions and avoid unpleasant surprises later.
Students should also carefully consider their intended major and future career goals. While following your passion is important, it’s equally important to understand the employment outlook and earning potential associated with a chosen field of study. Researching job opportunities, projected growth, and average salaries can help students determine how much debt is reasonable to take on for a particular degree.
The less debt you accumulate during college, the more financial flexibility you’ll have after graduation.
How to Tackle the Application Process#
The financial aid process can feel overwhelming, but starting early can make it much more manageable.
The first step is completing the Free Application for Federal Student Aid (FAFSA), which is available through StudentAid.gov. Students who wish to be considered for federal grants, work-study opportunities, federal student loans, and many state and institutional aid programs should complete the FAFSA as early as possible each year.
To complete the FAFSA, families should gather important financial documents, including tax information and asset records. Students and parents will also need Federal Student Aid (FSA) IDs to sign and submit the application electronically.
Accuracy is extremely important. Errors or missing information can delay processing and potentially affect aid eligibility. Families should carefully review all information before submitting their application.
Many colleges and universities also require additional financial aid forms or scholarship applications. Be sure to review each school’s requirements and submit all requested documentation before the applicable deadlines.
After submitting the FAFSA, students receive information that colleges use to determine financial aid eligibility. Under recent federal reforms, the FAFSA now uses a Student Aid Index (SAI) rather than the former Expected Family Contribution (EFC). The SAI helps schools assess financial need and build a student’s aid package based on factors such as family income, assets, household size, and college costs.
So, You Need to Apply for a Loan#
While scholarships and grants should always be pursued first, student loans often become part of financing a college education.
Federal Direct Loans are generally considered the best borrowing option because they offer fixed interest rates and consumer protections not typically available through private loans.
For loans first disbursed between July 1, 2025, and June 30, 2026:
Direct Subsidized Loans
- Available to eligible undergraduate students with financial need
- Interest does not accrue while the student is enrolled at least half-time
- Fixed interest rate: 6.39%
Direct Unsubsidized Loans
- Available to most undergraduate students regardless of financial need
- Interest begins accruing when the loan is disbursed
- Fixed interest rate: 6.39%
Parent PLUS Loans
Parents of dependent undergraduate students may also apply for Parent PLUS Loans to help bridge any remaining gap between educational costs and available financial aid.
For loans first disbursed between July 1, 2025, and June 30, 2026:
- Fixed interest rate: 8.94%
- Credit review required
- Loan amounts are subject to federal guidelines and individual eligibility requirements
Before borrowing, students and parents should carefully consider future repayment obligations and borrow only what is necessary.
Scholarships: The Silver Lining#
Scholarships remain one of the best ways to pay for college because they generally do not need to be repaid.
Scholarships are available from colleges, nonprofit organizations, businesses, community groups, religious organizations, professional associations, and countless other sources. Opportunities may be based on academic achievement, athletic ability, artistic talent, community service, leadership, financial need, or unique personal characteristics.
Some excellent places to search for scholarships include:
- Financial aid offices at colleges and universities
- High school guidance counselors
- State education agencies
- Community organizations
- Local businesses
- Religious organizations
- Professional associations
- Scholarship databases and search websites
Be cautious of companies that charge fees for scholarship searches. Free scholarship resources are widely available, and families should always research any service before providing personal information or payment.
What Should You Do Now?#
The college planning process can seem overwhelming, especially when you’re balancing tuition costs, applications, financial aid forms, and decisions about student loans. The good news is that you’re not alone. Every year, millions of students and parents successfully navigate the same process.
Start researching colleges early, explore financial aid opportunities, complete the FAFSA as soon as possible, and apply for scholarships aggressively. Taking these steps can significantly reduce the amount you’ll need to borrow and help your student graduate with less debt.
For official information about federal financial aid programs, FAFSA filing, grants, scholarships, and federal student loans, visit https://studentaid.gov.
If Money Is Tight Right Now
Cambridge Credit Counseling is a 501(c)(3) nonprofit organization dedicated to helping consumers improve their financial health. A counseling session is free, and there is nothing to buy.
If you’re concerned about paying for college, managing existing debt, or creating a realistic budget to support educational goals, speaking with a certified credit counselor can help you better understand your options and develop a plan that works for your family’s situation.
If it would help to read more first, here is student loan counseling.