• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

The College Investor

Student Loans, Investing, Building Wealth

  • About
  • Podcast
  • Research
  • Contact
  • Save For College
      • How To Start

      • How To Save For College
      • How To Pay For College
      • What Is the Average Cost of College?
      • What Is A 529 Plan and Where to Open One in Your State
      • How Much Should You Have In A 529 Plan By Age
      • How To Use A 529 Plan For Private Elementary And High School
      • What Are Qualified Expenses For A 529 Plan (And What Doesn’t Count)?
      • The Best Brokers To Open A 529 Plan
      • Tools + Accounts

      • 529 Plans: The Ultimate College Savings Plan
      • 529 Plan Contribution Limits
      • Prepaid Tuition Plans | What To Know
      • Understanding And Using 529A ABLE Accounts
      • Using A Roth IRA To Save And Pay For College
      • FAFSA Deadlines for Financial Aid
      • CollegeBacker Review
      • Upromise Review
      • UNest Review
      • Other Options

      • Student Loan And Financial Aid Programs By State
      • The Guide To Military And VA Education Benefits
      • How To Fill Out The FAFSA
      • How To Find College Scholarships
      • The Best College Scholarship Search Websites
      • How To Find Grants To Pay For College
      • Pell Grants: What They Are And How To Qualify
      • Understanding Federal Work-Study
      • How To Use A 529 Plan If Your Child Doesn’t Go To College
  • Student Loans
      • Borrowing

        • How Student Loans Work
        • How To Apply For A Student Loan
        • How To Find The Best Student Loans And Rates
        • Best Private Student Loans Of May 2022
        • Best Student Loans To Pay For Graduate School
        • Best Student Loans To Pay For Medical School
        • Parent Loans To Pay For College
        • No-Cosigner Student Loan Options
        • Guide To Income Sharing Agreements (ISAs)
        • Best International Student Loans
      • Get Out Of Debt

        • Best Places To Refinance Student Loans In May 2022
        • Best Student Loan Repayment Plans
        • Best Student Loan Refinancing Bonuses And Promotional Offers
        • Student Loan Forgiveness Programs (The Complete List)
        • The Full List Of Student Loan Forgiveness Programs By State
        • Public Service Loan Forgiveness (PSLF)
        • Top Student Loan Scams
        • Average Student Loan Monthly Payment
        • Average Student Loan Debt By Year
      • Reviews

        • Credible Review
        • Splash Review
        • Ascent Review
        • Citizens Bank Review
        • Commonbond Review
        • Earnest Review
        • ELFI Review
        • Laurel Road Review
        • LendKey Review
        • SoFi Review
  • Investing
      • How To Start

        • How To Start Investing in High School
        • How To Start Investing In College
        • How To Start Investing In Your Twenties For 22 – 29 Year Olds
        • How To Start Investing In Your 30s For 30 – 39 Year Olds
        • How To Start Investing With $100 Or Less
        • How To Give Kids The Gift Of Stock
        • What Is Dividend Growth Investing
        • IRA Rollover Chart
      • Tools + Accounts

        • Best Online Stock Brokers
        • The Best Traditional And Roth IRA Accounts
        • The Best Robo-Advisors
        • The Best Investing Apps
        • The Best Places to Trade Options
        • The Best Places To Open A Health Savings Account
        • The Best Solo 401k Providers
        • The Best Self-Directed IRA Providers
        • Best Cryptocurrency Exchanges
      • Reviews

        • Vanguard Review
        • Fidelity Review 2022: Still One Of The Best Online Brokers
        • M1 Finance Review
        • TD Ameritrade Review
        • Charles Schwab Review
        • Robinhood Review
        • Webull Review
        • Betterment Review
        • Wealthfront Review
  • Earn More Money
      • Extra Income

        • 15 Best Side Hustles You Can Start Earning With Now
        • Side Hustle Ideas: 50+ Ways To Make Money Fast
        • 100+ Real And Honest Ways To Make Money In College
        • 80 Ways To Make Money From Home (In Your Pajamas)
        • 5 Quick Money Making Ideas (That Take Less Than 1 Hour)
        • 10 Interesting Ways You Can Make Money Driving
        • High-Paying Side Gigs That Earn $1,000 or More Per Month
        • The 10 Best Money-Making Apps
        • Paid Surveys: Earn Money For Giving Your Opinion Online
        • 10 Crazy Ways To Make $10,000 You’ve Never Heard Of
      • Build Wealth

        • 35 Passive Income Ideas You Can Use to Build Real Wealth
        • 3 Ways To Make $50,000 Per Year Without Working With Passive Income
        • How To Become A Real Estate Investor With Just $500
        • 15 Best Online Business Ideas
        • How to Create Streams of Passive Income on a Limited Budget
        • Residual Income: 7 Super Smart Ways to Build It
        • The Most Common Multiple Income Streams
        • How To Become A Real Estate Mogul With Only $10,000
      • Reviews

        • Fundrise Review
        • RealtyMogul Review
        • FarmTogether Review
        • AcreTrader Review
        • Swagbucks Review
        • Survey Junkie Review
        • TopCashback Review
        • DoorDash Review
  • Personal Finance
      • Banking

        • Best High Yield Savings Accounts Of May 2022
        • Best Money Market Accounts Of May 2022
        • 10 Best Free Checking Accounts In May 2022
        • The Best Bank CD Rates Of May 2022
        • 10 Best Business Checking Accounts In May 2022
        • The Best Online Banks Of May 2022
        • 5 Best Credit Unions Nationwide of May 2022
        • Best College Student Checking Accounts In May 2022
      • Insurance

        • Best Life Insurance Companies
        • Renters Insurance
        • Car Insurance
        • Pet Insurance
        • Umbrella Insurance
        • Disability Insurance
        • Tuition Insurance
        • Travel Insurance
      • Credit Tools

        • Best Budgeting Apps
        • Cash Advance Apps
        • How To Get A Free Credit Score Report
        • The Best Credit Monitoring Services
        • Debt Settlement: Inside The Secret World
        • Credit Repair Explained: Should You Pay For Help?
        • Best Personal Loan Companies And Lenders
        • Online Loan Companies To Borrow From Home
      • Tax

        • Best Tax Software
        • Free Tax Software
        • IRS Tax Refund Calendar
        • Common IRS Questions and Errors
        • Federal Tax Brackets
        • Capital Gains Tax Brackets
        • 401k Contribution Limits
        • IRA Contribution Limits
        • HSA Contribution Limits
  • Forum
  • Search
Home » Student Loans » FAFSA » How To Pay For College: The Best Order Of Operations

How To Pay For College: The Best Order Of Operations

Updated: April 10, 2022 By Robert Farrington

Tweet
Share155
Share
Pin268
Email

At The College Investor, we want to help you navigate your finances. To do this, many or all of the products featured here may be from our partners. This doesn’t influence our evaluations or reviews. Our opinions are our own. Learn more here.Advertiser Disclosure

There are thousands of financial products and services out there, and we believe in helping you understand which is best for you, how it works, and will it actually help you achieve your financial goals. We're proud of our content and guidance, and the information we provide is objective, independent, and free.

But we do have to make money to pay our team and keep this website running! Our partners compensate us. TheCollegeInvestor.com has an advertising relationship with some or all of the offers included on this page, which may impact how, where, and in what order products and services may appear. The College Investor does not include all companies or offers available in the marketplace. And our partners can never pay us to guarantee favorable reviews (or even pay for a review of their product to begin with).

For more information and a complete list of our advertising partners, please check out our full Advertising Disclosure. TheCollegeInvestor.com strives to keep its information accurate and up to date. The information in our reviews could be different from what you find when visiting a financial institution, service provider or a specific product's website. All products and services are presented without warranty.

How To Pay For College

When it comes to how to pay for college, most people think the only option is to take out mountains of student loans.

Student loans are a source of funding for most students but they should actually be your last option. Student loans accrue a lot of interest and take years to pay off. In fact, a study from the OneWisconsin Institute finds that it takes graduates of Wisconsin universities 19.7 years to pay off a bachelor's degree and 23 years to pay off a graduate degree.

Knowing that students loans will likely be a source of funding, there is still an order of operations to follow when seeking out funding sources for college. After reviewing your financial aid award notification, you'll have to think about how you're going to pay for school.

In this article, we’ve provided the main groups of funding sources. Start with the top group and work your way down to the last (i.e., worse) option, which is student loans. By following this guide, there’s a chance you can reduce the amount of student loans needed to finance college. For a lucky few, they may find student loans are not even necessary.

Here's our take on the 'best' order of operations to pay for college. It's important to note that this is more like a "pie" than a strict order. The more you can contribute from the "earlier" slices, the less you'll have to borrow. And there is no "strict" rules here - but you should definitely use free money before other funds.

How To Pay For College [Order of Operations]
1. Scholarships and Grants
2. Your Own Savings (as a student)
3. Your Earnings (as a student)
4. Parents Savings For College
5. Parents Current Income
6. Fellowships and Assistantships 
7. Aid Through School Work-Related Programs
8. Federal Student Loans
9. Private Student Loans
Final Thoughts

1. Scholarships and Grants

Gift aid is part of your financial aid award. This is money that does not have to be paid back. It includes grants, scholarships, and any source of private funding that doesn’t require you to pay it back.

Of course, it depends on getting your FAFSA submitted on time.

Some students might realize a large amount of scholarships and grants. Others might not be able to get as much. 

Don't forget to apply for private scholarships and grants as well - don't just depend on your school. This sounds crazy, but I recommend high schoolers apply to at least 50 scholarships.

To make it easy, we also have this guide to Scholarships and Grants By State.

Check out these guides:

  • How To Find Scholarships To Pay For College
  • How To Find Grants To Pay For College
  • Pell Grants: What They Are And How To Qualify

2. Your Own Savings (as a student)

Saving for college requires planning. If you’re one of a small group who has accumulated money for college, it’s time to put it to work.

Maybe you've been saving your graduation money, or you've received birthday funds over time. Maybe grandma even left you some money to pay for college when you were younger.

If you have your own student savings, using it to pay for college is a great first step. 

3. Your Earnings (as a student)

Additionally, using your current income will help cut down on any loans you might need. If you don’t have any savings, use what you can from current income to help fund college.

A lot of people forget that they can earn money before going to school (i.e. the best summer jobs for college students), or even work full time during school.

I personally worked full time while going to university. I worked five days per week - Monday, Wednesday, and Friday nights, and during the day on Saturdays and Sundays. I tried to schedule my classes for Tuesday and Thursday, or if necessary, before work on the other days.

Don't know about ways to earn as a student? Check out our 100+ Ways To Make Money In College.

4. Parents Savings For College

Next on the list is any money your parents may have put aside for school. This could be in the form of a 529 college savings account, or other savings vehicle. 

Many parents have started saving for college for their students at a young age. Leveraging money in a tax deferred plan like a 529 savings account can be a great way to pay for the majority of school (if the money is there).

Parents might also have other savings set aside for their child. It's important to have conversations about parental contributions early, so that everyone involved in the "paying for college" debate knows what to expect.

5. Parents Current Income

Along with a student's income, a parent's income is also a primary source of paying for college. Even if parent's have saved very much, they may be able to contribute a little bit towards the cost of college every year simply through their current salary.

Some parents may be able to contribute much more than others, but every little bit that can be sent in to avoid borrowing for school is a huge win.

Note: Some states give tax deductions or tax credits for 529 plan contributions. You can contribute and withdraw in the same year in most states - making it potentially worthwhile to use your current income to contribute to a 529 plan, then pay for college from there.

See our guide: 529 Plan Rules By State.

6. Fellowships and Assistantships 

If you are attending graduate school, a fellowship is a great source of funding. It is awarded to graduate students based on merit. It allows the graduate student to focus on their studies rather than having to work or teach. Fellowships do not have to be paid back. They also look great on CVs and carry a certain cachet.

“It’s basically the Harry Potter scar on your forehead indicating you’re an amazing scholar,” stated Meredith Drake Reitan, associate dean for graduate fellowships at the USC Graduate School.

“The fellowship program is about research potential,” she said. “Faculty members might say, ‘They’re not ready to apply to for the NSF Fellowship because their research hasn’t quite jelled.’ But that’s actually right where the NSF wants them — it’s designed to be an early career accelerator.”

The takeaway: don’t think you aren’t qualified for a fellowship. They are certainly worth applying to. Speak with your educational counselor or advisor about how and which ones may have the highest potential for successful acceptance.

7. Aid Through School Work-Related Programs

We continue down the list and come to work-related programs that are meant to provide a flexible schedule around your classes. At this point, you’ve exhausted all forms of funding that don’t require work exchange or loans. We’re now moving into funding sources that will require some sort of payback.

Work studies are common on college campuses. These programs are usually tied into your financial aid award. They allow you to work on campus within a flexible schedule. Pay is usually minimum wage, but you can’t beat the flexible schedule provided by these programs. While it is a smaller source of funding, depending on your class schedule, it might be the only type of job you can take on.

Assistantships are usually reserved for graduate students. These programs are similar to work studies except they are teaching positions. Often the student will teach lower-level classes in areas they are very familiar with.

Check out our guide to Federal Work-Study Programs.

8. Federal Student Loans

We’ve come to one of the last option as a source for funding college. This is money that must be paid back, will accrue interest and often has some type of origination fee. For many students, it’s difficult to avoid taking on loans.

Federal loans have a fairly low interest rate, which often does not exceed the single digits. As reported by StudentAid.ed.gov, loans first disbursed on or after July 1, 2021 and before July 1, 2022 have the following interest rates:

  • Direct Subsidized (undergraduate): 3.734%
  • Direct Unsubsidized (undergraduate): 3.734%
  • Direct Unsubsidized (graduate or professional): 5.284%
  • Direct PLUS: (parents and graduate or professional students): 6.284%

In regards to loans for college, you aren’t likely to find a better deal anywhere else.

Don't believe us? Check out the Best Student Loan Rates here.

If you need to get a student loan, here's the process on How To Apply For A Student Loan (Both Federal and Private).

9. Private Student Loans

Private loans are another and final option. These may be loans from banks or other lenders that are non-government. They will typically have higher interest rates than government loans and won’t provide the same advantages such as loan forgiveness, hardship options, and flexible repayment plans.

Private student loans should really be a last resort, and before borrowing, you should really do a full Return On Investment Calculation of your college expenses to even see if college is worth it.

We recommend students shop and compare private loan options before taking them out. Credible is an excellent choice because you can compare about 10 different lenders in 2 minutes and see what you qualify for. Check out Credible here.

You can also see the full list of private student loan options here: Best Private Student Loans.

Infographic

If you agree with this order of operations, share this handy infographic with your friends and family that need to know this:

Best Order Of Operations To Pay For College

Final Thoughts

Paying for college can be a challenge. It's a huge sum of money, and there are a lot of different ways to go about it.

I like to think about it as a pie - each one of the steps above is a slice, and you can try to make some bigger to minimize others. 

The bottom line here is that you don't need to borrow the entire amount for school. There are many different ways to pay for college if you work at it.

Robert Farrington
Robert Farrington

Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him on the About Page, or on his personal site RobertFarrington.com.

He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.

He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.

How To Pay For College: The Best Order Of Operations
Editorial Disclaimer: Opinions expressed here are author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, or other advertiser and have not been reviewed, approved or otherwise endorsed by any of these entities.
Comment Policy: We invite readers to respond with questions or comments. Comments may be held for moderation and are subject to approval. Comments are solely the opinions of their authors'. The responses in the comments below are not provided or commissioned by any advertiser. Responses have not been reviewed, approved or otherwise endorsed by any company. It is not anyone's responsibility to ensure all posts and/or questions are answered.
Subscribe
Connect with
I allow to create an account
When you login first time using a Social Login button, we collect your account public profile information shared by Social Login provider, based on your privacy settings. We also get your email address to automatically create an account for you in our website. Once your account is created, you'll be logged-in to this account.
DisagreeAgree
Notify of
I allow to create an account
When you login first time using a Social Login button, we collect your account public profile information shared by Social Login provider, based on your privacy settings. We also get your email address to automatically create an account for you in our website. Once your account is created, you'll be logged-in to this account.
DisagreeAgree
9 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments

Primary Sidebar

Robert Farrington

Hi! My Name is

America's Millennial Money Expert

Welcome to The College Investor. We're here to help you escape student loan debt so you can start investing and building wealth for the future

Our expert guides, reviews, and more are designed to help you achieve your financial goals.

Want to learn more? See what's in my wallet.

As Featured In

Social Media

Popular Posts

Side Hustling

Side Hustle Ideas: 50+ Ways To Make Money Fast

Best Side Hustles

15 Best Side Hustles You Can Start Earning With Now

Make Money From Home

80 Ways To Make Money From Home (In Your Pajamas)

Crazy Ways To Make $10,000

10 Crazy Ways To Make $10,000 You’ve Never Heard Of

Make $50,000 Per Year

3 Ways To Make $50,000 Per Year Without Working With Passive Income

Student Loan Scams

Top Student Loan Scams

Net Worth of Millennials

The Average Net Worth Of Millennials By Age

Ways To Get Student Loan Forgiveness

Student Loan Forgiveness Programs (The Complete List)

Passive Income Ideas

35 Passive Income Ideas You Can Use to Build Real Wealth

529 Plan By Age

How Much Should You Have In A 529 Plan By Age

Ultimate Guides

529 Plan Guide

529 Plans: The Ultimate Guide To College Savings Plans

Student Loans and Financial Aid By State

Student Loan And Financial Aid Programs By State

Student Loan Advice

The Definitive Guide To Student Loan Debt: Everything To Know About Your Loans

Student Loan Forgiveness By State

The Full List Of Student Loan Forgiveness Programs By State

newretirement

How to Start Saving Now: The College Graduate’s Guide to Saving for Retirement

Latest Research

Institutional Merit Grants

Who Gets Institutional Merit Grants At Private Colleges?

Resume Student Loan Payments

Survey: Even With Higher Expenses, Most Student Loan Borrowers Are Ready To Resume Payments

Support From Parents Survey

64% Of Millennials Receive Support From Their Parents

undermatching at selective colleges

Undermatching: Why Do Smart Low-Income Students Not Enroll In Selective Colleges?

How Much Americans Pay To File Their Taxes

How Much Americans Pay To File Their Taxes

Footer

Banking

  • 10 Best Free Checking Accounts In May 2022
  • The Best Online Banks Of May 2022
  • The Best Bank CD Rates Of May 2022
  • Best Money Market Accounts Of May 2022
  • Best High Yield Savings Accounts Of May 2022
  • Best High-Yield Checking Accounts Of May 2022
  • The Best Bank Bonus Offers
  • The Best Business Checking Accounts

Investing

  • Best Online Stock Brokers In 2022 (According To Readers)
  • Best Brokerage and Investing Bonus Offers In May 2022
  • The Best Places To Open An HSA (Health Savings Account)
  • 5 Best Investing Apps With Free Stock Trading
  • How To Buy Stocks Online For Free
  • The Best Robo-Advisors Of 2022
  • The Best Self-Directed IRA Providers
  • The Best Traditional And Roth IRA Accounts Of 2022
  • Comparing The Most Popular Solo 401k Options
  • Top 3 Automatic Investment Apps Of 2022

Student Loans

  • Best Places To Refinance Student Loans In May 2022
  • Best Private Student Loans Of May 2022
  • How To Find The Best Student Loans And Rates
  • Best Student Loan Refinancing Bonuses And Promotional Offers

Insurance

  • The Top 10 Online Life Insurance Companies
  • The Ultimate Guide To Renters Insurance – Everything You Need To Know
  • The Cheapest Car Insurance For College Students

Connect

  • Contact Us
  • Advertise
  • Press & Media

About

  • About
  • Our Team
  • Podcast
  • Editorial Guidelines
  • How We Make Money
  • Archives

Social

Copyright © 2022 · The College Investor · Privacy Policy ·Terms of Service · DO NOT Sell My Personal Information

wpDiscuz