"Most students require financial aid to graduate from college," says Alexandria financial-aid expert Robert Leider. "To understand financial aid, one must be a college graduate."
That paradox, admits Leider, author of the popular college-money guide, "Don't Miss Out," is making financial-aid consultants as commonplace as income-tax specialists. But he and others claim that the search for college funds can be manageable--and profitable--in spite of proposed cuts in federal aid.
Here is a summary of reminders and places to start: Go Now, Pay Later
Federally guaranteed loans are still just about the only way to go to school without paying until graduation. For the first time, as is generally known, students in families earning more than $30,000 a year will have to prove they need the loan. Under current regulations, a family with one child and two parents, an annual adjusted gross income of $36,000 and net worth of $40,000, would be expected to contribute $5,000 to the student's education. If the costs of attending a particular college are more, the student could be eligible for a Guaranteed Student Loan.
The adjusted gross income figure on federal tax returns (a $2,000-$4,000 Individual Retirement Account started before April 15, for example) might bring a family's adjusted gross income below the $30,000 limit, making a Guaranteed Student Loan possible.
The Student Loan Marketing Association (Sallie Mae) has a new loan consolidation program which essentially allows students to combine or refinance outstanding college loans to allow longer repayment periods.
For students eligible for Guaranteed Student Loans, but unable to find a local bank willing to make the loan, United Student Aid (USA) Funds may be of help. This private, nonprofit corporation based in Indiannapolis (800-428-9250) guaranteed $546 million worth of student loans in 1980. USA Funds also finance Guaranteed Student Loans for the children of member corporations or associations, including General Electric, Air Force Aid, Navy Relief Societies and Mobil Oil. Pay As You Go
Starting this year, USA Funds also will finance the PLUS program: Parent Loans for University Students, available locally at Industrial National Bank, the National Bank of Washington and the Navy Federal Credit Union. Banks in both Maryland and Virginia are expected to offer PLUS loans in time for the coming school year. These loans are made to credit-worthy parents at 14 percent interest, with 5-10 year repayment periods beginning 60 days after the loan is taken out.
This "pay-as-you-go category" is giving rise to the greatest diversity and innovation, because it's aimed at the mass of middle-income families being squeezed out of federal lending programs. Independent colleges are beginning to develop their own installment or guaranteed cost plans.
Says Ken Kohl, financial aid director at Georgetown University and co-author of Financing College Education (Harper & Row, $5.95) with his wife Irene: "Until recently, colleges have been unwilling to commit their own funds to finance students' education . . . and have generally relied on outside plans."
Illinois and Massachusetts are issuing tax-exempt revenue bonds to provide lending funds to private colleges. A similar proposal is before the Maryland legislature and loans may be available by fall.
Among private foundations which make educational loans:
Pickett-Hatcher--Lends to students from southeastern states, including Virginia. A 100 percent increase in loan applications has depleted funds for the 1982-83 school year, although those already receiving Pickett-Hatcher loans may reapply. Applications for the following year should be submitted as soon as possible after Oct. 1.
Hattie M. Strong Foundation in D.C.--Makes about 200 no-interest loans every year to American citizens who are within one year of a degree (graduate or undergraduate). Not strictly for low-income students, but very competitive.
Private tuition assistance plans, the experts agree, must be analyzed as carefully as any investment strategy. Some options:
A brand-new Tuition Reserve and Deposit Plan open to anyone in the country requires a regular passbook savings account at Citizens Bank in Georgia, and then makes loans of 2-3 1/2 times the amount of the savings account at 1 percent interest per month.
The Knight Agency's New Insured Tuition Payment Plan out of Boston does not require a savings account, but monthly payments are higher ($475 a month for a four-year, $5,000-year loan).
Riggs National Bank offers college loans at 13 percent interest, although the rate is expected to rise by the end of the month.
Another possibility is establishing a credit line on which checks are written directly to the college, with interest charged if and when the checks are written (a good back-up source for emergencies, says Kohl).
Schoolchex are available nationwide from Irving Trust in New York. Girard Bank in Philadelphia has narrowed its Educhek program to Pennsylvania and Delaware and a few participating colleges (in this area, Marymount College, Washington & Jefferson, Georgetown, George Washington, George Washington Medical Center). Just Go
While fewer than a third of the nation's colleges and universities offered academic scholarships four years ago, says consultant Leider, almost half do now.
Some schools are willing to match other private scholarships a student has been awarded. "The idea being," says Leider, "that any student who is enough of a hustler to find a scholarship will not only make a good student, but . . . and this is even more important . . . a good alumnus one day and feed money back."
It may be worth spending an afternoon "hustling" at the Foundation Center at 1001 Connecticut Ave. NW. The 1982 edition of Foundation Grants to Individuals lists 150 foundations which provide scholarships to everyone from fourth- generation Americans of Anglo-Saxon heritage to art students at colleges with Delta Phi Delta chapters to someone with the name "Downer."
Many financial aid counselors throw up their hands at the proliferation of computerized scholarship searches. One of the best known, Scholarship Search in New York, is now being investigated for consumer fraud.
But Washington financial aid consultant Ed Klein says, "I can't prove it, but my personal thought is that the student who is persistent will get a scholarship from 25 sources if the sources are reasonably good."
He recommends finding out if the search service includes need and non-need-based aid, loans and scholarships and offers guarantees or refunds. Also, determine the cost per source. "If you pay $25 and get five scholarship possibilities," says Klein, "you're paying $5 per source and that's high." He advises a $2-$3 range.
Montgomery College financial aid director Herm Davis, who provides a computer search and counseling service in Gaithersburg--$40 for a minimum of 25 sources--says that special scholarships may not go to the most qualified students because the programs are not widely advertised. He suggests checking any organization with which students or parents are affiliated. Some examples:
Eagle Scouts may get automatic scholarships at some southern schools seeking "good citizens." The National Guard offers $1,000-a-year scholarships with much less rigorous service requirements than ROTC. The Daughters of the Cincinnati (members are all descendants of revolutionary war officers) provides up to $1,500 a year to high school seniors who are daughters of commissioned officers (current, retired or deceased) in any branch of the service. (Last year, more than 100 students applied for about 10 scholarships; this year's deadline is April 15.)
Another possibility is putting off college temporarily and taking advantage of corporate-paid tuition plans. (Half of the mid-size and large corporations pay tuition for employes.)
Another option: a cooperative education program in which a student's time is divided between the classroom and a paying job. (More than 1,000 four-year colleges--about one-third of the country's colleges--offer co-op education programs with businesses in career-related fields.) A clearinghouse is the National Commission for Cooperative Education in Boston.
One final point mentioned repeatedly by financial aid counselors: Fill in every blank on every form and pay attention to deadlines.
"They always have a good excuse," laughs Ken Kohl, " 'I was in Europe' . . . 'I broke my leg' . . . 'my parents forgot.' " The student is responsible for the student's situation and they have to see the deadlines are met by whomever else is involved."
Getting financial aid is becoming even more competitive than getting into college in the first place. Counselors stress starting early, with both parents and students committed to finding the right college and the best way to pay for it.
"You can't just say 'I can't,' " says Irene Kohl, "because you can."