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Paying for College

By Anita Dey
Special to
November 1996

College life offers most students a chance for intellectual growth, a taste of independence and a new circle of friends. But nothing can spoil the experience more than the thought of paying for it.

The cost of higher education continues to outpace inflation, growing by six percent to seven percent every year. Average tuition and fees at a public, four-year college top $9,000 a year and nearly $20,000 at a private school. That's scary enough. But parents of today's infants likely will have to shell out more than $125,000 for a four-year public education and nearly $250,000 for a private college diploma.

We'd like to make things easier. No, we aren't handing out cash. But we do offer this guide to the best financial resources and tips available on and off the World Wide Web.

Where To Begin?

Picking a college and deciding how to pay for it isn't something done by the seat of your pants. You'll have to get organized, whether you're the student or the parent.

By the junior year of high school, your college planning should be well under way. We've compiled a checklist to help you keep track of the milestones. Print it out and post it in your house to make sure you're not missing any deadlines.

How Much Will it Cost Me?

You can't go on until you answer this question. Use this calculator from Sallie Mae, the Student Loan Marketing Association, to estimate what you'll have to pay. Write down the number.

Whoa! How Can I Save So Much?

Start early. It's far less painful to stash away smaller amounts of money over a longer period of time. And you'll give reinvested earnings a chance to grow.

You don't necessarily have to sock away the entire cost of college or to have it all in the bank on the first day of enrollment. (More on financial aid later.) But experts say it's a good idea to have at least half the cost up front.

Having a bigger college fund will give the student a wider range of schools to choose from and will help the family keep its debt down. When parents put off saving for college, they often wind up tapping their retirement funds, which may not be good for the family's long-term financial health.

This saving plan designer from FinAid shows you how much you must contribute monthly to an interest-bearing bank account or investment fund to reach your savings goals.

Where Do I Keep My Savings?

Forget the mattress. But forget highly speculative investments, too. There are many investment options with varying tax effects. Discuss them with your financial institution or contact a reputable financial planner. If appropriate for your family, you also might consider prepaid tuition, offered by some states and schools. Virginia officials recently unveiled a plan to prepay college tuition up to 18 years in advance.

Think twice before accepting college money from grandparents or other relatives. You'll also have to weigh whether savings should be placed in the name of the child or the parent.

What If I Can't Save Enough?

Don't panic. Nearly half of U.S. students receive financial aid. According to the College Board, $50.3 billion in aid was available from federal, state and institutional sources in 1995-96.

The amount of aid the student gets is determined by a standardized process; everyone fills out a Free Application for Federal Student Aid (FAFSA). The U.S. Department of Education then calculates your Expected Family Contribution (EFC), based on family size, number of students in college, savings and present earnings.

Get an estimate of your Expected Family Contribution from the College Board. Once you have that number, subtract it from the estimated college cost you figured earlier. The result gives you a rough idea of how much your family can expect in financial aid.

How Can I Actually Get Financial Help?

Help comes in the form of subsidized and standard loans, so-called gift aid, including grants and merit-based scholarships, and other programs such as work study. The single largest source of aid is the federal government, followed by the states, colleges and private organizations. A little further down, you'll have the change to explore all options in detail.

Approach this process with care. Keep a file with all the information you gather about various aid programs. Set up a calendar, noting application deadlines and important requirements. (Incomplete or late forms can hurt your chances.) Keep dated copies of all applications you file.

Okay, enough with the lecture. Let's get started. Fill out the FAFSA. You can get it from your high school guidance office or by calling 1-800-4-FED-AID.

You also can download FAFSA software to file electronically. (The FAFSA can be extremely confusing. You may need some help.)

Submit a completed FAFSA as soon as possible after Jan. 1. Aid is generally awarded on a first-come, first-served basis.

About four weeks after you submit your FAFSA, the processor will send you a Student Aid Report (SAR). The SAR will tell you your Expected Family Contribution. Make sure the information on the SAR is accurate, then mail it to the colleges you are considering.

How Do I Decide What to Do?

When a student is accepted, the college aid office will verify information from the FAFSA, determine eligibility and send a letter outlining your aid package. Here's an example of the packages one family might be offered.

If the student has been accepted into more than one college, compare the aid packages and academic programs to select the college that best meets your family's needs and the student's education goals.

Here are details on the common elements of a financial aid package:

Tell Me Again Why I'm Going Through This

By the time you've finished figuring out how to pay for college, you may forget why you ever wanted to go in the first place.

Check out a few sites to get excited again:

The Yale Daily News Freshperson Issue: An insider's guide for new Yalies. Get a feel for Ivy League life and find some good general tips for getting started on any campus.

The Princeton Review College Database allows you to search hip capsule reviews of colleges across the nation.

Find out what rush week is like in fraternity row at California's Chico State.

Check out the home page of a physics major at the College of William and Mary.

CollegePost serves the students of the Washington Metro area with news, listings of events and an area to post if you are looking to make a new friend or find a date.

© Copyright 1996 The Washington Post Company

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