Paying for college is expensive, and the costs are only going up. But the fact is that college graduates usually earn 38% more on average when compared to non-graduates (Business Insider, 2019). So how can parents and college students afford to pay for college? This guide will go over some basic and best ways to fund college tuition as a parent, and how your child can help.

Without Debt

There’s a difference between a mortgage and other common types of loans. A mortgage is a secured loan, meaning that in exchange for lower interest rates you offer up your home as collateral for the loan. Compare that to unsecured loans or unsecured debt, like credit cards where there are no forms of collateral and interest rates that compound in large percentages.

If your goal is to put your student through college so they can walk the stage without debt, you have some decisions to make right now.

First, as financial advisor, Dave Ramsey says, “you have to take debt off the table.” Decide now to help your child do what it takes to make it through school without debt. Even though almost 70% of students graduate with debt (Marketplace, 2019), there are ways to make it through without going into debt.

Next, you have to decide where to put your energy. Will you work on reducing how much tuition you will have to pay, or will you work on saving more money? You should eventually do both, but we all have to start somewhere.

Reducing Costs

One of the reasons attending a four-year university program is so expensive is how long the program lasts. Paying four rounds of yearly college costs like books, housing, food, and tuition add up fast!

However, many potential college students choose to take advanced placement courses (AP classes) to earn college credits before attending college. As a result, AP credits will count towards general and even major-required credits, in some cases. However, if you do decide to take this route, make sure that the college your child plans to attend will accept AP credits from high school.

Additionally, some colleges offer dual-enrollment classes that give your child a way to start on their general education before their first semester. Students who can complete more work now will be ahead in the future.

Saving for the Future

Don’t just use a savings account to save money for college.

We get it, “future” can be a scary word, especially when dealing with something as important as college. But the sooner you start, the better equipped you and your child will be when they head off for college. So, if you’re asking yourself “How am I going to afford college?” Here are some options to help you prepare for college.

Education IRA

You might think starting a savings account is the best way to save up for college, but an Education Savings Account (ERA) or an Education IRA. However, not everyone can sign up for an ERA, and account holders are limited to contributing only $2000 per year. If you qualify for an ERA, it can be a good option for building your savings, but you shouldn’t stop there.

Start a 529 Plan

Many parents choose to start contributing to a 529 to build their college savings. If you qualified for an ERA, you can start a 529 and put away more each year than an ERA alone. Like an ERA, a 529 will grow tax-free, allowing you to save more than a traditional savings account. 

Make sure you take the time to carefully review the fine print to make sure the 529 plan provides the right benefits for you and your family, as some plans may change your investments depending on the age of your child.

Earning More Money

We don’t necessarily mean to go out and get another job, because there are many resources you can use to get college paid for you. 


Save money for college and apply for scholarships in Tennessee

There are thousands of scholarships available to students who apply for them, even if your child can only win small scholarships, they can be an easy way to pay for college when you add them up. Even though teenagers might not typically like thinking about their future, help them find and apply for scholarships. 

Keep in mind that there are different types of scholarships that fit into different categories. These categories include merit scholarships, needs-based scholarships, federal scholarships, private scholarships, and corporate scholarships.

Merit-Based Scholarships
  • Athletic Scholarships
  • Academic Scholarships
  • Artistic Scholarships

Usually, these scholarships are awarded based on demonstrated talent, performance, or merit of a student. In order to qualify for and win a merit scholarship, students usually should keep up their grades, be involved in extracurricular activities, and place well in the ACT and SAT tests. Applying early for these scholarships also improves the chances of winning an award.

Needs-Based Scholarships
  • College-Awarded Scholarships
  • Federal Student Aid Awards
  • Pell Grants

In order to apply for a needs-based scholarship, you must fill out the Free Application for Federal Student Aid form, or FAFSA. Awards are based on your family’s income and the amount of the award will depend on the type of grant or scholarships you apply for.

Federal Scholarships

As the name implies, these scholarships are sponsored by the Federal government. They can be awarded on merit, or include needs-based scholarships. When you fill out your FAFSA form, your information will be sent to some federal scholarship organizations.

Private Scholarships

Private organizations, foundations, and philanthropists offer scholarships for students. In order to find these scholarships, you can use these resources to search for private scholarships as well as other types of scholarships.

The U.S. Department of Labor’s Scholarship Finder


Corporate Sponsorships

Many big businesses offer scholarships and giveaways to students who apply. Burger King, Chick-fils-A, The Coca-Cola Corporation, and more offer awards to help students pay for tuition and fees. Some of these awards are contests, while others require essay or video submissions.

Visit to learn more about corporate scholarships and to start an application.

Help your Child Plan and Save

FM Bank - Mother and Daughter Discussing College

Finally, one of the best ways to prepare for college expenses is to start planning with your child. The decision to attend college should not be taken lightly because of the high expenses and the impact it will have on your child’s life. 

If your child is still young, help them choose a school early on so you have a clearly defined goal. If possible, try to choose a college or community college that is in-state, as many schools offer discounted tuition for students in their home state.

Allowing your child to live at home while in school will help them save on rent and food, thus reducing their overall costs.

A father and son discussing plans for college so they can avoid student loans.

Another way to help your child succeed and avoid student loan debt is to help them treat finding scholarships as their job. Dual enrollment and AP credit classes can also reduce the amount of time your child will have to attend college.

As a parent, other things you can do to support your child is to loan them the money they need to pay for school. That way, even though they are in debt to you, neither of you will have to worry about dealing with the interest rates of an official loan.

Also, you should encourage your child to work while in school. It’s been shown that students who work part-time jobs for less than 20 hours a week earn better grades than those who do not work while in school (NBC, 2017).

With Debt

Sometimes, even after exploring all of your options, many students will have to take out some type of college loan. The good news is a college loan can help you improve your credit score, so long as you maintain your loan payments and choose a loan with decent terms.

Types of Student Loans

Subsidized Loans

These federal loans are offered to students who qualify for needs-based financial aid. What’s unique about these types of loans is the U.S. Department of Education pays the interest on your loan while a student meets the terms of the loan.

Unsubsidized Loans

Another way to finance your child’s higher education is through unsubsidized federal student loans. Unlike subsidized loans, anyone can receive a direct unsubsidized loan and there is no requirement to show financial need.

Parent PLUS Loans

Also known as direct PLUS loans, these are offered to dependent undergraduate students and their parents. Graduates and professionals also have access to direct PLUS loans.

PLUS loans help fill gaps left from other sources of financial aid. In order to be eligible for a PLUS loan, applicants must undergo a credit check.

Private Loans

If you choose to go for private student loans, you should work with a lending advisor to help you choose the best loan for your situation. Private loans typically have more requirements than federal loans and may require payments during your school years. However, some allow you to defer your payments until a later date.

Credit unions typically offer student loans and may offer lower interest rates and have more relaxed lending options. However, you will have to join a credit union in order to start a loan, and they may not offer the type of loan you need. So be sure to carefully consider your options before joining a credit union.

Follow F&M Bank for More Saving Advice, Financial Support, & So Much More

We hope this comprehensive guide for how parents can pay for college has helped you start making plans for your child’s future. If you have any questions or would like help discussing investment options, savings accounts, certificates of deposit, and more, call your local F&M Bank.

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