How to Pay for College When Federal Student Loans Aren’t Enough

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You've packed your belongings, told your loved ones goodbye and left for college. All is well until you receive a notification from your college indicating that you have an outstanding balance. The federal student loans you were awarded fell short of covering the bill. What should you do?

If there's a gap between the amount you were awarded in federal student loans and what you need for tuition and expenses, you'll need to make it up somehow. Here are some options to consider.

Appeal for More Financial Aid

If you find you need more financial aid than you received in direct federal student loans, appeal directly to your school's financial aid office. You can do this at any time, including after receiving your financial aid package and after the school year starts. Most schools will require you to provide an explanation of special circumstances, such as a change in income from a job loss or pay cut, that led to you needing more funds. But whether or not there has been a change, this is your best place to start. At worst, your financial aid administrator will say no—at best, you may get the extra funding you need.

Apply for Scholarships

You may be able to increase the funding you have for school by applying for scholarships. Scholarship dollars available to you may be small, but can really add up if you're able to win several. Visit or call your university's financial aid office and inquire about scholarships that are available to incoming and current students, and research opportunities online at sites such as Scholarships.com and Fastweb. Apply for any scholarships that you qualify for, even if they're only for a few hundred dollars. Unlike loans, scholarships and grants don't need to be repaid, nor are they considered taxable income.

Look Into Tuition Payment Plans

A tuition payment plan may not reduce your expenses, but it could at least make them easier to manage. Inquire with your university bursar's office about payment plans that will spread out your payment over several months instead of charging you all at once. Some universities extend payment plans to students who, like you, are dealing with a funding gap and need more time to come up with funds. You may be able to pay monthly without being charged late fees or getting dropped from your classes. This allows you to remain enrolled to avoid a gap in your studies and work the payments into your budget.

Find a Part-Time Job

When you've reached your limit on federal loans, a part-time job can help you cover your remaining expenses without taking on more debt. Look for jobs that are on or near campus to reduce your fuel costs and time commuting (you'll still have homework to do, after all).

The coronavirus pandemic has changed the landscape of the job market, so some of the jobs that were in high demand months ago may not be an option. Instead consider industries that are newly ripe with opportunities for teenagers and young adults. Many grocers, for example, are hiring motivated young people to do grocery deliveries and restock shelves. Tutoring and freelancing are other viable options that can help you earn money quickly.

Reduce Your Expenses

Has it been a while since you looked at your budget, or maybe you don't have one at all? No worries. It's a perfect time to start as you get creative and find ways to fund your education. Grab a notebook and list your monthly expenses and income. Classify your expenses as needs (rent, food, utilities) or wants (entertainment, travel) and prioritize them based on importance. Eliminate or drastically reduce your list of wants until you free up cash to reduce your tuition bill. Creating a lean budget may be painful, but your sacrifices will be well worth it.

You may also want to rethink your living situation. While the thought of ditching your pad for a cheaper one that's smaller or farther away from school to cut costs may sadden you, moving could help you free up a big pile of cash. What you save on housing may be enough to cover a chunk of the outstanding balance still owed to the college or university you will be attending. If uprooting sounds unappealing or unrealistic, consider bringing in a roommate, which can similarly cut your rent payment.

Explore Other Borrowing Options

Federal student loans are the best way to borrow for college, but they're not the only way to do so. If the gap between your federal loans and the amount you owe is significant, you may need to look into additional loans.

Parent PLUS loans are one option. These are available for the parents of dependent students who are enrolled in college at least part time. The funds can be used to cover tuition, fees and other college-related costs.

A credit check is required during the application process, and parent borrowers can be denied if they have a poor history repaying debts. Parents who have been denied can still qualify if an endorser with good credit assumes repayment responsibility or the parent borrower is able to prove extenuating circumstances affected their credit history. If a parent's loan application is denied, the student's borrowing limit on unsubsidized federal student loans may be increased to the amount set for independent students.

If you've reached your annual limit for federal loans, you might consider applying for a private student loan to cover the remaining expenses. Private lenders decide what loan limits to set for borrowers, so your federal loan limit won't be a factor.

Only consider private student loans after you've exhausted all other options. They sometimes come with steeper interest rates and require a credit check. Plus, you won't get the perks, like income-based repayment plans, deferments, forbearance and loan forgiveness, that you'll get with federal loans.

You can use Experian CreditMatch™ to view loan offers from private lenders.

The Bottom Line

There are several options to help cover college costs if your federal student loans aren't enough. Revisit your budget and cut costs to make up the difference or find ways to earn more. Also, consider grants and scholarships first as they do not have to be repaid.

Use funds from a parent PLUS or private student loan as a last resort, and be mindful that they require a credit check. Boost your approval odds by knowing where your credit stands and fixing any errors before you apply. You can sign up for Experian credit monitoring to get your credit report and score for free.

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