We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. Learn more.

Board Game With Student Shaped Peg
Jose Velez / Money

Even if your college student received a scholarship or financial aid, odds are you’re staring at a hefty college bill now that the fall semester is nearly here.

Every year, colleges send out their fall bill and every year, thousands of families scramble to pull together the money to cover college costs. For many families, that scramble results in borrowing — sometimes at levels they can’t afford.

At this late stage, you may have no choice but to borrow to pay the bill. But there are strategies you can employ right now that can reduce how much debt you have to take on and set you up on a better multi-year plan handle college bills. Here’s what to know:

Sign up for the tuition installment plan right now

Many colleges offer a 0% installment plan that allows you to spread payments out over 8 to 12 months. The plans often start in August, so if you haven’t researched it already, find out what your student’s college offers. You’ll pay an enrollment fee (they typically range from $25 to $150) but it’s likely less than the cost of taking a loan — considering interest payments and the origination fee. The installment plan offers time to figure out upcoming payments.

Explore your budget for "cash flow"

Incomes that cover only basic needs may not allow for "cash flowing," or paying for some college bills with current income instead of loans. But higher-earning families should have some room to play with their discretionary spending. Steve Stanganelli, CFP and owner of College Cash Pro, a college planning business, does budget reviews of expenses with clients to find hidden funds. For one family, he identified they were spending $20,000 on non-necessary things that weren’t part of their regular budget. He recommended they review their spending to figure out where the money was going and redirect it toward college.

Things like dining out or delivery, which grew very popular during the pandemic, housewares and decorating, and kid activities can add up, he says. Often, people are surprised to discover how much money they can free up. Stanganelli recommends redirecting that cash to a separate account where you won’t be tempted to spend it.

“That may make it more manageable to pay for part of college through (your current) cash flow,” he says.

To find hidden money, check your credit card and bank statements for discretionary spending. Eliminate unnecessary subscriptions, skip dining out, analyze grocery spending and postpone travel. Next, review all insurance coverage and ask for new quotes, says Patti Hughes, owner of Lake Life Wealth Advisory Group in Chicago. Your auto insurance carrier may offer reduced rates for putting a student car “in storage", offering minimum coverage for a car not being driven while a student is on campus. Canceling cable could save $150 per month, Hughes says.

Finally, redirect any savings incurred from your college student no longer living at home, like cheaper groceries or utility bills, toward college. Even if you can only come up with a couple thousand dollars, that’s money someone doesn’t need to borrow.

Have your student accept the federal student loan

Experts say the federal student loan is the best loan option and should be prioritized above other kinds of loans. Federal student loans have flexibilities and protections that most other types of loans do not and are issued in the student’s name, which protects parent credit. Plus, for undergraduates, the loans are quite cheap. The interest rate for this year is 3.73%. Freshmen can borrow up to $5,500 — $2,750 per semester — and a portion of that might be subsidized if you’re eligible.

If you haven’t filled out the FAFSA, do it now to access these loans. The deadline for 2021-22 academic year is June 30, 2022. If your family already filled out the FAFSA but turned down some or all of the student loans offered in your financial aid package, you can contact your financial aid office to change your preferences. Your student will need to complete the Master Promissory Note so the school can submit the request for the funds.

Make sure your student has skin in the game

Stanganelli recommends students contribute their savings — if they have savings — before a family considers taking parent or private student loans.

“That will also set them up for the financial aid forms in October because by then there are minimal student assets to show,” he says. Twenty percent of student assets are counted toward the FAFSA’s expected family contribution (or EFC), whereas parent assets are assessed at up to 5.64%.

A part-time job won’t help with the fall bill, but students can cover personal expenses, other fees, and spring semester books. A full-time summer job helps next year’s bottom line, too. Plus, student earnings up to $6,970 don’t count as income on the FAFSA, and work-study earnings also don’t count as income, though they are taxed. (P.S. If you’re worried about your student having time to work and study, research has shown that students who work part-time — less than about 15 hours a week — have GPAs similar to those who do not work, and another study found people who worked while in college actually earned higher salaries after graduation.)

Analyze the best way to use parent savings or a 529 plan

Many families have saved something for college, but not enough to fully cover college expenses, so it pays to be strategic.

If your student qualifies for need-based aid, spending down savings or 529 funds might help you qualify for more aid next year. Run the school’s net price calculator or an EFC calculator to see whether spending down your assets garners financial aid, Stanganelli says. Keep in mind that most colleges don’t meet full financial need, and just 5.64% of parent savings is calculated as money that can be put toward college, so savings doesn’t have as large an effect as income on your expected family contribution.

Also, consider the annual student loan limits. If you spend down your savings or 529 early, remember your student can’t borrow more than $7,500 in junior and senior year. Hughes says for most cases, she recommends spreading out savings or 529 distributions and using that alongside federal student loans for all four years. Combined with freeing up some of your current income and using a payment plan, that might help you meet your obligations without parent borrowing.

Consider a side gig

If you can’t free up money in your budget, you may need to bring more money in. That could be a side gig like caregiving or babysitting, pet sitting, tutoring, or driving for a ride share company. But make sure a side gig doesn’t increase your expected family contribution (EFC) to the point that it reduces financial aid in future years. Of course, if you already have a high EFC and aren’t receiving need-based aid anyway, then earning more income won’t hurt you. (If you will have a second child entering college, that changes your EFC so don’t assume you won’t qualify for aid).

Explore refinancing your mortgage

Refinancing from a 15-year mortgage to a 30-year term may drop your monthly payment, freeing up cash for college. You might also save by refinancing to a lower interest rate on the same mortgage term.

“Sometimes a significant amount can be saved with a lower interest rate mortgage,” Hughes says.

But this process could take 30 days, so it’s not an immediate solution. You could also open a home equity line of credit at the same time, Stanganelli says, but plan to draw only if you absolutely need to. Also, be wary of a cash-out refinance at this juncture because you don’t want a pile of money sitting in a bank account when you file October’s FAFSA for next year, he says.

Analyze your retirement profile and savings goals

Saving for the golden years is important. But if you’re on track with your savings goals, you might be able to scale back a bit while your student is in college to free up some cash. Stanganelli’s budget template recommends a savings goal of 20%. That includes building up an emergency fund, investing in a taxable account, contributing to a 401k or IRA, or possibly paying extra toward credit card balances or a mortgage loan to more quickly pay off debts. But many families won’t be able to handle all these savings goals and college at the same time. At a minimum, continue to save 10% toward retirement and take advantage of employer 401(k) matches, he says. Talking to a financial professional who understands college might be the best move.

Shop around when you borrow

If you’ve considered all the other strategies and still need to borrow some parent loans, compare rates and loan options carefully before signing on the dotted line. Federal Parent PLUS loans come with varying payment options and protections, but a private loan might offer lower interest if you have stellar credit. The PLUS loan this year comes with a 6.28% interest rate and a 4.23% origination fee. Private loan interest rates currently range from 1.5% to 13% depending on your credit score and whether it’s a variable or fixed interest rate. This overview by Road2College, a college planning website, provides a good starting point.

Keep in mind that loan debt can quickly creep up on you. One of Hughes’ clients, for example, needed help strategizing a $2,500 per month payment on PLUS loans after putting three kids through college. To avoid getting in over your head, map out four years of borrowing and then run a loan calculator to see your prospective payments. If you can’t afford adding that amount to your monthly bills, you shouldn’t borrow it. Some families have to revisit the college choice even at this late stage.

Keep looking for scholarships

It may be too late for this semester, but students should hunt for scholarships throughout their college career. “Check with the financial aid office for school-specific scholarships that may be available,” Hughes says. Also explore individual academic departments, outside private scholarships, and employer-sponsored scholarships.

More from Money:

How to Make a Strategic Spending Plan for Your 529 College Savings

Soaring Home Values Could Lower Your College Student's Financial Aid Package

More Parents Are Borrowing to Pay for Their Kids' College. Here's How to Do It Without Risking Your Own Future