How People Pay for College

Saving for higher education may be one of the most valuable investments you make for the future. But college costs are high, and paying for college can be a challenge for many parents and students. Learn about your options for funding your child's college education.


Many people save for college in tax-advantaged accounts:

  • A "529" plan or Qualified Tuition Program. States provide these college savings plans, most of which allow you to save tax-free for higher education expenses. The DC College Savings Plan is a 529 plan.
  • A Coverdell Education Savings Account
  • A custodial account: a Uniform Gifts to Minors Act (UGMA) account or a Uniform Transfers to Minors Act (UTMA) account

Grants and Scholarships

Grants and scholarships are financial aid that doesn't have to be repaid. Grants are often based on a student's need, while scholarships are usually based on a student's merit. Grants and scholarships come from many sources:

Work-Study Programs

Work-study programs provide college students with paid part-time work related to their courses of study. Colleges and universities, the federal government, and some state governments offer these programs.


Many families and students borrow money to pay for college. These loans come in many types:

  • Federal student loans. Some federal loans are based on a student's financial need; others are not. Federal loans include Direct Subsidized Loans and Direct Unsubsidized Loans, Direct PLUS Loans (for graduate and professional students or parents), and Federal Perkins Loans.
  • State student loans. To learn about loans available in each state, review the U.S. Department of Education's list of state higher-education agencies.
  • Private student loans. Banks, credit unions, or colleges and universities make private loans. The interest rate on these loans is usually higher than the rate on federal student loans, and it is based on the borrower's credit score.

Federal Tax Credits for Education

Tax credits help you offset the costs of higher education (tuition, books, fees, supplies, equipment) by reducing the amount of your income tax.

  • American Opportunity Credit allows you to claim up to $2,500 per student per year for the first four years of school as the student works toward a degree or similar credential.
  • Lifetime Learning Credit allows you to claim up to $2,000 per student per year for any college or career school tuition and fees, as well as for books, supplies, and equipment that were required for the course and had to be purchased from the school.

Grants and Awards for DC Residents

DC Tuition Assistance Program (DCTAG)

DCTAG provides DC residents with grants of up to $10,000 toward the difference between in-state and out-of-state tuition at public four-year colleges and universities throughout the United States. DCTAG also provides up to $2,500 per academic year toward tuition at private colleges in the Washington, DC metropolitan area, private historically black colleges and universities (HBCUs) nationwide, and two-year colleges nationwide.

DC College Access Program Last Dollar Award (DC-CAP)

Students who graduated from a DC public or charter high school in 2001 or later may apply to receive up to $2,070 per year for up to five years to pay for undergraduate tuition and expenses. For current information about the Last Dollar Award, call 202.783.7933.

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For more information on the DC College Savings Plan, please call 800.987.4859 (800.368.2745 for non-District residents) or contact your financial advisor.  An investor should consider the investment objectives, risks, charges, and expenses of an investment carefully before investing.

The District of Columbia College Savings Trust Program Disclosure Booklet contains this and other information. Read it carefully before you invest or send money.

An investor should also consider, before investing, whether the investor's or designated beneficiary's home state offers any state tax or other benefits that are only available to residents of that state. An investment in another state’s 529 college savings plan may not offer comparable benefits.

The Government of the District of Columbia does not guarantee investments in the program. Investment involves risk, including possible loss of principal.