It will be even more expensive to borrow money for college this year—3 tips to cut down costs

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Students and families planning to take out federal loans to pay for college this fall will see the highest interest rates in over a decade. The interest rate for direct federal undergraduate student loans disbursed after July 1, 2024 will be 6.53%, the Department of Education announced Tuesday. That's up from the current 5.5% interest rate, and the highest rates have been since 2008, according to ED data. The undergraduate rate hasn't hit 6% since 2009, and from 2006 through June 2008 the rate was 6.8%. New graduate student loans will have an 8.08% interest rate and parent PLUS loans will come with a 9.09% rate. With millions of Americans taking years to pay down their student debt, it's understandable that incoming college students may want to avoid borrowing for school. But with the cost of a college education continuing to rise, it can be difficult to get through those four years without taking on some debt. Here are three ways to lower your overall college costs and reduce the amount you may need to borrow. 1. Apply to scholarships The college admissions process can be grueling and time consuming, but you could be missing out on free money if you don't consider applying to scholarships as well as schools. There are many different kinds of scholarships available through state and local governments, as well as private and nonprofit organizations. They won't all be full-ride packages, and you might think applying for a $500 grant may not be worth your time. But every dollar counts, and going through the process could help you in ways you may not expect in the future. "The more scholarships I applied to, the better applications I was able to submit and ultimately have more success down the line," Gabriella Carter, a Princeton University grad who earned $2 million in scholarships previously told CNBC Make It. 2. Try an alternative path Many students may want the traditional four-year on-campus college experience, but that means four years of tuition, housing, food and other costs. If your ultimate goal is to save money while still obtaining a college degree, you might have to think outside the box. Starting your college education at a community college or trade school is one way you may be able to cut down on costs while racking up course credits. You could also consider taking additional courses to expedite your education and reduce your expenses that way. Ethan Nguonly did just that when his parents told him that they would only pay for two years of his schooling. Now 22, Nguonly hustled to get all his course credits done to earn his bachelor's degree from the University of California — Berkeley in just two years. He has some regrets about missing out on the traditional college experience, but he told CNBC Make It last year that the experience was worth it in the end. "I was able to put my financial goals [first] and really get started on a journey towards financial independence," Nguonly said. "I would make that sacrifice again." 3. Look for discounts