Going to college these days comes with a hefty price tag, but a college education also means the potential of significantly higher earnings over a lifetime. Despite this, whether your child is the soon-to-be-student or you are, looking at the cost of tuition, textbooks and more can leave you feeling overwhelmed. However, with some smart financial planning, attending even an expensive school is within reach. Many people end up using a combination of the approaches below to pay for their education.

529 Savings

If your child is very young or college is a longer-term goal for you, you can start a 529 savings plan. The advantage of this plan is that money is allowed to grow in it tax-free, and it can be withdrawn tax-free as long as it is used for qualified educational expenses. There are high contribution limits although above a certain amount annually there may be gift tax. However, there are a few disadvantages to a 529. Money not used for educational expenses could be subject to tax although it is also relatively easy to change the beneficiary on the plan so someone else can use it. Furthermore, depending on your income and other factors, a 529 could count as part of your assets and reduce the amount of financial aid your child receives.

Retirement Accounts

Many people may not realize they can use a retirement account to pay for educational expenses. As long as certain conditions are met, withdrawals from a Roth IRA for qualified educational expenses are permitted. Unlike a 529, it is not included in financial aid calculations. Savings in a Roth IRA are also more flexible. If a child goes to a less costly college, the money can simply be used towards retirement as well. Another possibility is taking a loan from a 401(k) although this generally must be repaid within in five years and sooner in case of job loss.

Student Loans

Even for people who have saved money in 529 plans and savings accounts, student loans may be a necessary supplement to pay for college. Many people take out a mix of federal and private loans. Students who take out loans should consider what their future earnings will be like and how much it is reasonable to take out against that. They should also look for loans with low interest rates although it may be possible to renegotiate higher-interest loans at a later date.

Grants and Scholarships

When students look for federal student aid for college, they fill out a form known as the Free Application for Federal Student Aid. This allows them to determine not just what loans they may be eligible for but also what grants they could get, which do not have to be paid back. Private grants and scholarships may also be available. The amount offered varies from a few hundred dollars to full scholarships that pay the entirety of a student’s tuition. Some scholarships are very niche, available to students in a narrow demographic studying an unusual subject matter. While grants and scholarships do not typically cover the cost of an education, they can be helpful combined with other sources of funding.