Understanding how to pay for college

Paying for college doesn't have to be complicated. Here's what you need to know about when and how to cover your tuition costs. (iStock)

For many students, determining how to pay for college can be a challenge. Tuition is generally due before the start of the semester and, in most cases, will have to be paid in a lump sum although some schools are willing to work out a payment plan.

The good news is, there are lots of different options for covering your tuition expenses including taking out grants and scholarships, applying for student loans or using your savings. Here's what you need to know about when tuition is due and how to make sure the bill gets paid.

When is your college tuition payment due?

Each school sets its own deadline for when tuition payments must be made. You can check with the bursar or financial aid office for the school you are attending to determine the due date applicable to you.

As a general rule, however, typically you will need to pay your tuition bill either shortly before classes start for the term or at the very beginning of the term. That means you may have to pay in August for a fall term beginning in September and pay in December for a winter/spring term that begins in January.

Many schools will not permit you to register for your courses until your bill for the semester or trimester has been fully paid so you don't want to miss the deadline. You'll typically only have to pay for one term at a time, even though your financial aid is awarded on an annual basis.

3 ways to pay for college

There are a few options to cover your college costs. If you don't have the money saved for tuition and your family member(s) such as your parents aren't going to cover the cost for you, you'll likely need to rely on one or more of these three payment methods.

  1. Grants and scholarships 
  2. Federal student loans
  3. Private student loans

1. Grants and scholarships

Grants and scholarships might be provided by your school, by the government, by community organizations, by charitable foundations or by other non-profit or for-profit businesses. Many are awarded based on financial need, or based on meeting some specific criteria such as coming from a particular ethnic background or majoring in a specific field.

You do not have to repay any money obtained through a grant or scholarship, which means getting the maximum amount of money from these sources can help you save on student loans.

If you don't qualify for a grant or scholarship, don't worry: student loan options are still available. Credible makes it easy to check interest rates from multiple lenders without affecting your credit score. Whether you choose a loan with a fixed interest rate or a variable interest rate, getting the lowest rate possible matters for saving money.

2. Federal student loans

Federal student loans come from the Department of Education. They offer low fixed interest rates that are very competitive and your credit doesn't matter in determining eligibility or interest rate. These loans also provide flexibility in repayment options, income-driven payment plans and many other borrower benefits.

It's always a good idea to take the maximum amount of federal student loans available before taking out any private loans. You will need to complete the Free Application for Federal Student Aid (FAFSA) to qualify for these loans, which come with a fixed interest rate as low as 2.75% for Direct Loans for undergraduates and 4.30% for Direct Loans for graduate students from the 2021 to 2022 school year.

If you've hit your limit as a federal student loan borrower, visit Credible to explore private student loan options.

3. Private student loans

There are borrowing limits for federal student loans, which most people hit before fully covering tuition costs. Private student loans can fill in the gap.

Interest rates are still very affordable on private student loans, especially in the current low-rate environment, and lenders will generally permit you to borrow up to the school-certified cost of attendance. However, you may need a cosigner if you don't have the credit and income to qualify on your own.

You can visit Credible to explore private student loan options to see what rates and terms you might qualify for.


Credible's student loan calculator will help you understand the cost of borrowing so you can decide how much you'll need and what you can expect to pay for your loans post-graduation.

What are college payment plans?

Whether you are using student loans to fund your education or are planning to work or pay using savings, it's important to understand the payment plan options your school provides.

While it's customary for tuition to be due at the start of the semester, a number of colleges offer different payment plan options including monthly plans where you make payments for your schooling over a 12-month period. An extended payment plan like this may come with added fees, though, so be sure that it makes sense financially for you.

By researching all your options when it comes to paying for college, you can pick a payment method that meets your needs. If that method involves private student loans, visit Credible to view a rates table to compare fixed and variable interest rates from multiple lenders to see which loan is best.