Paying for College

Whether or not you can afford paying for college from current income or savings, you may want to consider alternative funding sources, such as financial aid, scholarships, or loans.

On this page:

Potential sources to help pay for college

Combining some or all of the funding options below can help you continue to make progress on your other goals, such as retirement savings—and can provide tax benefits.

  • Contributions from the parent(s) and student.
  • College savings accounts such as a 529 plan or custodial account.
  • Scholarships or federal student aid. Scholarships are the best funds available, since students don’t have to pay back the money. Search for available scholarships at CollegeBoard.com.

Federal student aid could be in the form of loans, grants, need-based aid, and more. Federal
loans—even those not based on financial need—have low fixed interest rates and let you defer
payments while the student is in school. Fill out a free application for federal student aid.

Loans and lines of credit

These loans are easy to apply for, and decisions are made instantly:

  • A Parent Loan for Undergraduate Students (PLUS)

    This loan is sponsored by the federal government and may not require a federal student aid application. It offers a fixed interest rate, but the parent must start repaying the loan immediately.

  • Private student loans

    These loans are available for students, parents, or students with a parent as a co-signer. They offer variable interest rates based on your credit score, and repayment can be deferred until the student completes college.

  • Home Equity Line of Credit (HELOC)

    You may also want to consider a Home Equity Line of Credit (HELOC) if you’re eligible. You can draw money from a HELOC as needed, so you pay interest only on the outstanding amount borrowed, and the interest is usually tax-deductible. 

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What you can do now


Estimate the aid you might qualify for

Your student's eligibility for financial aid is determined largely by your Expected Family Contribution (EFC), which is the amount of college expenses the Federal Student Aid office estimates you can pay.

The amount of aid you're eligible for is the difference between your EFC and the cost of attending a specific college. Your EFC doesn’t change based on what school your child chooses to attend, so don’t exclude a school simply because of cost—especially before applying for financial aid.

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What you can do now


How aid applications are evaluated

Your EFC takes into account both the parents' and the student's income and assets, excluding home and retirement assets. Generally, 20% of a child's assets and 5%–6% of the parents' assets are used for evaluation.

Parental assets do not include your home, but do include:

A student's assets include:

  • Cash and savings and checking accounts
  • Non-retirement investment accounts
  • Custodial accounts (UGMA/UTMA)

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