What are the different ways to pay for college or graduate school?

Financing a college education is a significant investment, and there are a number of options that may help you reduce your financial burden after college.

You have a choice about how you pay for your education. Understanding your choices can help you make the right decision for your situation.

Scholarships and grants

Grants and scholarships are often are a type of financial aid that doesn’t have to be repaid. Grants are often need-based, while scholarships are usually merit-based.

Start by researching available scholarships and grants  and applying for as many as you can. The earlier you start, the better you’ll be able to plan ahead, so you know what other forms of financial assistance you’ll need.

Tuition payment plans

Tuition payment plans, also called tuition installment plans, are short-term payment plans that split your college bills into equal monthly payments.

Tuition installment plans can be an alternative to student loans if you can afford to pay tuition over fixed payments. Payment plans generally vary by college or university, but in addition to breaking up the payments, schools do not generally charge interest. They may, however, have up-front fees or require a larger initial payment than subsequent installments.

Work study

Federal work study programs provide part-time jobs for undergraduate and graduate students  to help pay for their education expenses. Work study programs are available through your college or university and are based on your school’s funding level, the availability when you apply, and your financial need.

TIP: Ask your financial aid office about the options for getting paid for work-study. At most schools, work-study money cannot be used to cover direct costs (like tuition, on-campus housing, and meal plans), because you must pay those bills before you earn the work-study funds.

Federal vs. private student loans

Even after considering the above financial assistance programs, you may still need additional help to pay for college through either federal or private student loans, or a combination of the two.

Federal student loans are made and guaranteed by the Department of Education, including: Direct subsidized loans, Direct unsubsidized loans, and PLUS loans. Private student loans, however, are provided by banks, credit unions, and other private lenders – with varying rates and terms — and they don’t offer the same protections for consumers.

Here are the key differences between these two types of loans.

Through federal Direct Loans, you may also qualify for a public service loan forgiveness program if you work full time for a qualifying public service employer and make 120 qualifying monthly payments.

Again, it’s best to exhaust all of your other options, including applying for the maximum federal student loans you’re eligible for, before shopping for a private student loan.