Paying for College 101
- Agather College Consulting
- Jan 1
- 5 min read
Updated: Jan 12
"Paying for college is one of the only decisions a parent makes that can negatively impact multiple generations of a family." Debbie Schwartz, Road 2 College
College is one of the largest expenses most families will ever take on, often second only to buying a home, and sometimes even more expensive. The biggest mistake some families make is applying to (or accepting) a college and then trying to figure out how to pay for it.
Most families cover college costs with past income (savings), current income, and future income (loans). Federal aid beyond the opportunity to take out a federal loan is available only to families with low incomes and few assets.
The smartest approach to paying for college is simple but critical:
Consider college a consumer purchase: set a budget first, then shop for colleges that realistically fit your budget.
Below is an overview of the primary ways families pay for college—and how to reduce costs along the way.
Understand the Basics of Financial Aid
The federal government, many state governments, and colleges assess a family's relative financial strength when awarding need-based aid. The stronger a family's financial position, the more that family is expected to be able to pay for college.
Accessing federal aid requires filing the Federal Application for Federal Aid (FAFSA)
Only low-income families are awarded financial assistance through federal grants (Pell/FSEOG).
All students (regardless of income) qualify for the following federal student loans:
$5,500 freshman year
$6,500 sophomore year
$7,500 junior & senior year
$3,000 year five
Institutional (School-Based) Need Aid
The majority of colleges do not offer significant institutional need-based aid.
Generous (need-based) colleges run their own need analysis (institutional methodology).
Some colleges are loan-free; most are not.
Most generous schools require the CSS Profile or additional institutional forms.
Some colleges will reduce need-based aid if a student is awarded a merit scholarship.
ACC Tip: Always run a Net Price Calculator (Google the school's name and NPC) for each college, but understand it is only a directional estimate.
Merit Aid & Tuition Discounts
Offered based on academics, talent, leadership, or other criteria (institutional priority).
May or may not include a need component.
Key research questions:
How much merit aid is historically offered?
What percentage of students without need receive merit?
Where does your student’s profile fall relative to admitted students?
Chasing merit without research can lead to disappointment—strategy matters.
ACC Tip: Review Big J Consulting resources to see how colleges have historically awarded need and merit aid.
Recommendation: Create a balanced college list with affordable colleges for your student and family.
Typically, you can "chase" merit or prestige but not both.
For example, Ivy League colleges do not award merit scholarships, while the University of Alabama does not offer need-based aid.
Generosity varies widely across colleges, and some colleges award very little aid.
Private and public schools can both be affordable—with the right fit.
In-state and out-of-state public options can work, depending on aid policies.
In some cases, a student can find more affordable colleges by leaving the state.
Note: In-state public colleges in North Carolina are relatively affordable compared to those in northeastern states or California.
Secondary or regional (non-brand) campuses often:
Can be very affordable.
Can offer more merit scholarship money and full-ride scholarships than flagship campuses.
State & Regional Opportunities
Many states offer grants and scholarships, but they may require additional forms.
Regional tuition exchanges allow students to attend certain public universities at:
In-state rates, or
Reduced out-of-state rates
Not all schools or majors participate—details matter.
Cost-Saving Enrollment Strategies
Institutional/Departmental Scholarships
Apply to both institutional and departmental scholarships, even when the student is enrolled.
Community college + guaranteed transfer pathways
Often results in the same degree at half the cost.
Commuting from home
Eliminates room and board.
Resident Assistant (RA) roles after first year:
Can reduce or eliminate housing and meal costs.
Competitive and eligibility vary by school and class year
Military & Service-Based Options
National Guard
Offers generous Tuition Assistance Programs.
Students should also be eligible for in-state tuition in most if not all states.
ROTC scholarships
Available to applicants and enrolled students.
Pay some or all college costs in exchange for future military service.
Service academies
Extremely competitive.
All college costs are covered in exchange for future military service commitment.
Veteran-related benefits
Some states offer in-state tuition to children of veterans.
Employer & Family Benefits
Employers that offer tuition assistance (often part-time):
FedEx/UPS
Starbucks
Target
Amazon
Parent benefits:
Corporate scholarships
Veteran benefits
Parents employed by colleges:
May receive free or reduced tuition.
Some participate in tuition exchange programs.
Private Scholarships (Manage Expectations) - There is no magic piñata that a student hits and drops lots of scholarships. Winning outside scholarships takes time, energy, and essays.
Private scholarships - less than 6% of college funding comes from outside private scholarships.
Applying can be very time-consuming.
Scholarships are often small and for one year.
Scholarship award can be reduced/displaced if a student is awarded need-based aid.
National scholarships tend to be larger but highly competitive.
Based on junior-year PSAT
Some schools offer significant awards, even full rides (selective colleges do not)
Current Trends
Many colleges raise tuition, housing, and meal costs annually.
Most students do not graduate in four years; plan accordingly.
Some colleges offer tuition freezes.
Key: Research future cost increases—not just year one prices,
to include housing after year one.
Loans & Financing (Use Carefully)
Federal student loans are always the best loan for students (automatic with FAFSA).
Parent loans
Home equity (HELOCs or refinancing)
Retirement funds
Roth IRAs (penalty-free, but taxable)
Borrowing against pensions or 401(k)s
ACC Tips:
Loans are the most common—and often the worst—way to pay for college. If you need to take out a significant loan in the first year of college, your student is likely at a college that your family cannot afford.
Strongly recommend NOT using retirement funds. Home equity should be considered only with extreme caution as a "bridge loan," not as the primary way to pay for college.
Final Thoughts
Do not allow your beloved student to emotionally blackmail you to pay for a college that is not in your family's short and long-term budget.
Knowledge is power. Research deep. Make no assumptions. Expect costs to rise with inflation.
Factor in all siblings and their college costs in the budgeting.
Choose schools with research and intentionality, not hope, just as you would with any other consumer purchase.
The best college is one your family can afford without long-term financial harm.
Knowledge is power, and calm is contagious. There are affordable options for all types of students.
Want to learn more about financing college? Check out my blogs at Agather College Consulting, including: Want an affordable college? Shop like you are buying a car.
Comments