The Strain To Pay for College

It's no wonder. According to the College Board, the average cost of a private, four-year college in 2007-08 was $32,307 a year, including tuition, room and board, and fees. That was up 5.9 percent from the previous year. The average full-time student attending a private college received about $9,300 in grants and tax benefits.

To fill the gap, many students had been turning to private loans.

In the 1996-97 school year, 93 percent of the $38 billion in loans to undergraduate and graduate students came from the federal government. A decade later, 76 percent of the $77 billion in education loans came from the federal government, and 24 percent came from private and state sources.

But many of those lenders relied on the same asset-backed securities that mortgage lenders did. They packaged the student loans and sold them to hedge funds and insurance funds. When those investors got nailed by the subprime mortgage debacle, the spigot for student loans was also shut off. According to FinAid.org, which tracks the student loan industry, 36 lenders have suspended private student loans.

Even financial institutions that made federally guaranteed loans have scaled back because of the credit crunch. FinAid.org found that 137 of those lenders have pulled out.

Across the nation, universities are bracing for what could be a difficult school year.

Recently, the U.S. Department of Education reported that the number of students submitting the Free Application for Federal Student Aid, or FAFSA, for the 2008-09 school year jumped to 9 million from 7.7 million last year.

Not only will prospective students probably require more financial aid, but current students might also find that their fortunes change if they or their parents lose their jobs.

Tracy Schario, director of media relations for George Washington University, among the most expensive schools in the country with a $50,357 price tag for tuition, room and board this year, said the school eliminated its application deadline for aid so current students can ask for more money if their situations have changed. The school is also considering increasing the amount of money it sets aside for financial aid -- no easy feat as endowments across the country are decreasing because fewer people have disposable income to contribute.

At George Mason University, where tuition is $7,512, more students have filed financial aid appeals because of job losses or the higher cost of living, said Jevita DeFreitas, director of the financial aid office.

At the University of Maryland at College Park, some parents who were on a monthly tuition payment plan are having trouble keeping up, Bauder said. "They're falling behind, and it's only October," she said. "They want to be committed, but they don't have the resources to do it. It's certainly a phenomenon we haven't seen in 10 years."

Many parents are starting to turn to relatives for help. Several Web sites have sprung up that function as gift registries for prospective college students. Freshman Fund, for example, allows parents to designate the gifts towards a 529 savings plan. Started in August, the Web site has added users daily, said co-founder Jason Olim.

"Because of this economic downturn, we're seeing more community-related savings," said Larry Glazer, founder and managing partner of Mayflower Advisors in Boston. "Use the friends and family route. Earmark some of those birthday gifts towards college, instead of toys."

Price, the Lorton resident, is relying on the kindness of her relatives to help her get to college. Her parents, now divorced, started a savings plan for her when she was a child, but it is not enough, her mother Florene Price said.

Recently, Florene Price, a social worker making $47,000 a year, asked her parents and three siblings to contribute to a savings account she opened for her daughter. "The economy was looking bleak, so I enlisted my family," she said.

It's been discouraging so far. One school, Hampton University in Hampton, Va., only offered $2,000 worth of aid. Tuition, room and board are almost $24,000.

"That's when it became apparent to me that it's going to be pricey," Florene Price said. "Financial aid is not what it used to be. I went to school on financial aid. The amount they're giving them now is basically nothing compared to tuition."