4 Ways to Pay for College
February 17, 2026
The cost of getting a college education seems to only go in one direction—up. The average cost of attendance, including tuition and fees, room and board, books and supplies, transportation, and other expenses at a 4-year school currently ranges from about $26,000 a year at a public, in-state college or university, to $59,000 a year at a private one. Even community colleges now cost over $15,000 a year when accounting for living expenses. How can any parent afford to pay $100,000+ per child for college tuition? Here are 4 ways of financing a college education to consider.
1. 529 Plans
Most states offer tax-advantaged college savings vehicles in the form of a 529 plan, which consumers can invest in directly on behalf of a beneficiary. While many people open a 529 plan for a child, a 529 plan can be used to grow savings on behalf of a child or grandchild, a spouse, or even for yourself. Money from a 529 plan can be used tax-free to pay for qualified higher education expenses, and recent updates now allow up to $10,000 per year to be used for K-12 tuition and up to $35,000 to be rolled over into a Roth IRA for the beneficiary, thanks to the SECURE 2.0 Act signed into law in 2022.
Many states also allow a tax credit or deduction for contributions. If your student wants to go to a private college, there are almost 300 private colleges and universities that participate in a private 529 plan.
Some states also offer prepaid tuition plans. These allow prepayment of state college tuition at the current rate, regardless of the future cost. Prepaying 2 years of current tuition means that your future student gets 2 years of tuition at a later date, no matter how much costs have increased in the meantime. While these plans often have more limitations, such as residency requirements, they can be a better option because they are typically guaranteed by the state and are not subject to market risk, unlike 529 savings plans.
Two resources for comparing options by state are Savingforcollege.com and the College Savings Plans Network.
2. Don’t Forget to Fill Out the FAFSA
This is the Free Application for Federal Student Aid, commonly known as the FAFSA. Completing this form is required by most institutions, which use it to determine their own need-based financial aid package. It’s also required for federal aid such as the Pell Grant. Most students will qualify for some form of financial aid, such as grants and scholarships that can reduce the total amount needed. And these forms of financial aid don’t need to be repaid.
3. Loans
Many students also take out loans to help cover college costs. Look into federal loans first. These loans, like the Stafford, have more flexible repayment options compared with private loans. Experts recommend students with financial need should exhaust their federal options before borrowing private education loans. But depending on your credit history, a private loan may have a lower interest rate, so it’s worth checking out and comparing.
4. Consider Community Colleges for the First 2 Years
Students on a tight budget may want to consider getting their first two years of college at a local community college, especially if they are unsure of their academic path. Community college can be a less expensive way to get general required courses completed and offer dedicated faculty who are interested in teaching. And many community colleges also offer the ability to transfer to a state-affiliated 4-year school if GPAs are at least 3.5. Living at home for the first two years can also reduce the cost of room and board, and allow any savings plans to continue growing a little longer.
What Not to Do
Don't withdraw from or borrow against your 401(k). Many parents want to cover all of their children’s college costs. But financial experts caution that you shouldn’t raid your retirement savings to do that, especially in light of already low levels of retirement savings nationally. Most students learn important financial lessons from taking some responsibility for working and saving to contribute to their college expenses. And, a student can take out a loan for their education if need be. You can’t take out a loan for retirement.
The Bottom Line
Instead of trying to save the entire amount you think you’ll need, plan on coming up with a third in savings, and using current income, financial aid, and loans for the rest. Students can contribute in the form of summer jobs during high school and college work-study jobs as well, which can help cover the cost of books and discretionary expenses. Start saving early, so that you have more time to grow your child’s college fund. And keep contributing to your own 401(k) or other retirement plan.
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