From Free Money to Private Loans: The Complete List of Ways to Pay for College

Jon O'Donnell Updated on March 23, 2020

If you’re new to the college funding process, you may find yourself a bit overwhelmed. That’s not unusual.

In fact, most people get pretty stressed out when they start thinking about how to pay for college. Your best bet is to use multiple approaches to fund your education. Let's take a look at your options.

New Call-to-action

Free money source #1: grants 

Say it with us: Free money is the best money!

Start with the Federal Application for Student Aid, otherwise known as FAFSA.

When you apply for FAFSA, you’ll automatically be evaluated for several types of financial aid, including federal grants and some state grants. It's important to apply for FAFSA even if you think you won't qualify for need-based aid. Why? Because FAFSA is also used to distribute some forms of non-need based aid and you don't want to miss out. 

When you receive your acceptance letters from various schools, you’ll find out about your eligibility for certain kinds federal and state aid. (Just to be clear, even though you apply for FAFSA through the government, your results will come from the schools you apply to. It's a little bit confusing.) 

Some federal grants you may qualify for include the Pell Grant and the Federal Supplemental Educational Opportunity Grant (FSEOG), which both provide funds for students who demonstrate financial need.

The Teacher Education Assistance for College and Higher Education (TEACH) provides funds for people who intend to teach in high-demand fields in low-income schools.

The Iraq and Afghanistan Service Grant (IASG) is a federal grant for students whose parent or guardian was a U.S. military member who died in service in Iraq or Afghanistan after September 11, 2001.

Many states also award grants. Check out what your state has to offer here.

Free money source #2: scholarships

Scholarships are another source of free money. They may be awarded based on need, merit, or certain characteristics, such as military service, nationality, or program of study.

Colleges, universities, and professional schools that accept you for enrollment may automatically evaluate you for certain scholarships based on your FAFSA application. However, it’s always a good idea to search the school websites to find out about additional scholarship offerings. Many scholarships require separate applications.

It’s also wise to check in with your high school guidance counselor to find out about local organizations that might offer scholarships.

Plus, you can always search for scholarships on your own. Check out our Nitro scholarship search engine to see what you may qualify for. 

Not-exactly-free money: work-study

Your financial aid package may include an option for work-study. This is another way to get federal student aid by working part-time on-campus while you're in school.

And get this: Studies show that working part-time during college can actually increase your GPA. See Why College Students Should Work—But Only 12 Hours a Week.

If you're interested in work-study, you should indicate that when filling out your FAFSA. You should also be aware that work-study does not guarantee you an on-campus job, but it may give you priority status for open positions. Learn more here.

Your next best bet: federal student loans

Your FAFSA application also allows you to be automatically evaluated for federal students loans. These loans come with a lower interest rate than private loans, and they also have certain borrower protections, such as income-based repayment plans. 

There are two types of federal lines: subsidized and unsubsidized.

If you qualify, subsidized student loans should be your next source of funding after grants and scholarships. Why? Because the government covers the loan interest while you're in school in the form of a subsidy. This can amount to a savings of thousands of dollars over the life of the loan. Subsidized loans are issued based on financial need.

The government also offers unsubsidized student loans, which are not based on financial need. For these loans, the government offers no repayment help. However, unsubsidized federal loans can still be a great value because they  come with lower interest rates and fees than loans from private lenders.

However, both kinds of federal loans are subjected to certain dollar limits, so you may need to find other ways to fully fund your college education.

Less-obvious options 

Before you apply for a private student loan to fill in tuition gaps, you may want to consider some alternative options. 

One option is to choose a less-expensive school so you won’t have to come up with as much money. Starting at a community college is a smart strategy for reducing your education costs.

See also: What is the Cheapest Way to Get a Bachelor's Degree?

You could also ask relatives or family friends to contribute to your education costs.

Parents may decide to take a disbursement from their 401(k) or IRA. However, this should be considered a last-resort option, as hefty tax penalties will apply. Plus, taking a disbursement reduces the amount of funds the parent will have for retirement … and while it’s possible to get a loan for college, it’s generally not possible to get a loan for retirement.

Private loans can fill in the rest

If you've exhausted all of the options above, a private student loan may be the way to go. However, it's important to know what you're signing up.

To help ensure you’re making a smart decision around student loans, use our free NitroScore tool. The NitroScore tool will help you to determine the affordability of different college funding scenarios based on your projected salary after graduation.

At that point, if you’re still looking for additional funds for college, we suggest checking out private loan offerings from some of our trusted and highly vetted loan partners. Funding your college education can be a many-step process. Get started today.

Published in: Private Student Loans

About the Author
Jon O'Donnell

Jon is a writer and marketer for Nitro who is passionate about bringing transparency to the student loan process along with providing families with the information needed to make smart financial decisions. He also just recently refinanced his student loans allowing him to pay them off 5 years faster all while saving an additional $152/month. As he continues to pay them off himself, he strives to help others do the same. Jon also has a long history of connecting people with educational opportunities to help them improve their careers and their overall personal finances. In his free time you can find him reading travel blogs and researching destinations around the world in search of his next adventure. Read more by Jon O'Donnell

Additional Nitro Recommended Student Loan Lenders

Lender Rates (APR) Loan Types Terms Eligible Degrees Eligible Loans  
1.25% - 12.35%1 Variable & Fixed 5 - 15 years

Undergrad Students Learn More

View Disclosure

Lender Rates (APR) Loan Types Terms Eligible Degrees Eligible Loans  
1.80% - 11.98%1 Variable & Fixed 5, 10 & 15 years

Undergrad & Graduate Student & Parent Learn More

View Disclosure

Lender Rates (APR) Loan Types Terms Eligible Degrees Eligible Loans  
1.24% - 12.99%1 Variable & Fixed 5 - 15 years

Undergrad & Graduate Student & Parent Learn More

View Disclosure

Lender Rates (APR) Loan Types Terms Eligible Degrees Eligible Loans  
1.24% - 11.53%1 Variable & Fixed 5 - 15 years

See Examples

Undergrad & Graduate Student & Parent Learn More

View Disclosure

Lender Rates (APR) Loan Types Terms Eligible Degrees Eligible Loans  
2.71% - 14.50%1 Variable & Fixed 5 - 15 years


Undergrad & Graduate Students Learn More

View Disclosure

Lender Rates (APR) Loan Types Terms Eligible Degrees Eligible Loans  
3.52% - 9.50%1 Variable & Fixed 5 - 15 years

Undergrad & Graduate Students Learn More

View Disclosure


Do you still have a gap to fund your education?

If so, check out these 6 featured lenders:

Find your best option