The latest joke among parents of many high-school seniors: "The good news is that Susan got into Princeton; the bad news is that Susan got into Princeton."
The projected cost of four years at Princeton and other Ivy League schools is approximately $67,000. Even the tab for an undergraduate degree at a state-supported college in the Midwest for out-of-state students will total close to $40,000.
With student financial aid increasingly harder to obtain because of 1) the deep cuts in government-sponsored grants and loan programs and 2) the greater demand on already strained college coffers for such assistance, Susan simply may not be able to afford the college of her choice unless she and her family do some creative, hardheaded financial planning.
Aid is still available--even for high-income families with youngsters in expensive private colleges--but it must be applied for immediately, since most funds will have run out by mid-June.
If you've waited until now to begin looking for college aid, either because you didn't really believe that Susan would be admitted to Princeton or because you thought your family income was too high for you to obtain federal money, the experts advise that you "run, not walk" to a financial-aid officer at your child's selected college.
"This late in the game that is the best person to help you put together an aid package which will meet your needs," says Kenneth Kohl, financial aid director at Georgetown University and author with his wife, Irene, of the third edition of Financing College Education.
The aid package will fall into two main categories:
Student Resources--Usually include earnings from summer and school-year employment, a portion of the youngster's own savings and a federal government-backed Guaranteed Student Loan (GSL).
The Kohls stress particularly the importance of a youngster's willingness to contribute substantially to defraying educational expenses. Few colleges will even consider awarding a need-based grant or loan if a student doesn't commit earnings of about $3,000 from full-time summer and part-time school year employment to the total sum needed.
"This often comes as quite a shock to the relatively affluent kids who are used to working just enough to earn extra spending money," says Irene Kohl, an independent college adviser. "But most financial-aid counselors now believe that the student as well as the parents should bear the responsibility for meeting college costs."
If the youngster is unwilling to share the monetary burden, the Kohls believe that parents probably should opt for a less expensive school.
Guaranteed Student Loans are more readily available than many people think. Students whose family income is under $30,000 qualify automatically for a GSL of up to $2,500. Those from families who earn over that amount are still eligible if they pass a "remaining need" test, based on the cost of attending the college selected, minus the amount they and their parents are capable of paying.
"Students from higher-income or asset-rich families erroneously believe that they are not eligible for a GSL," says Alexandria college financial planner Robert Leider.
"However, if a youngster waives his rights to any federal aid except a GSL and uses the correct formula for determining the amount of money he needs, he can probably get one. Even a family with an income of $75,000 may be eligible for $5,000 under the GSL program if they have two children enrolled in expensive schools."
Parent Resources--May consist of a portion of family income and savings and a federally supported loan (most commonly called a PLUS loan).
The federal government has provided some guidelines to help parents determine the amount they are expected to pay toward the college education of their children. According to the April 1, 1983, Federal Register, a family of four with an income of $45,000 should be able to contribute around $6,000 in the 1983-84 academic year. (If two children are enrolled in college, this means $3,000 for each.)
To help meet that need--or to obtain more money if the selected school's bill will be more than the expected contribution from student and parent resources--parent loans under the government-sponsored PLUS program are available to families in all income brackets. The amount a parent can obtain is equal to the cost of attending a particular college, minus all other aid received, up to a maximum of $3,000 per student per year.
If you cannot find a PLUS lender, the college may have its own loan program or you can contact a private educational lender such as the Knight Agency in Boston or the Girard Bank in Philadelphia.
Some sort of financial aid from the college also may be available, usually in the form of a scholarship, loan or work-study arrangement, if the student and parent contributions don't meet the costs. However, most of these funds are either already gone or are limited to families with incomes under $30,000.
The most important advice given by the Kohls: "If you have other children heading for college in the next few years, don't wait until the spring prior to enrollment to think about how everyone's education will be financed."
"Planning should begin in April and May of the junior year with the taking of the Scholastic Aptitude Test (SAT) to help determine which schools will be likely to admit your youngster," says Irene Kohl. "Then you have plenty of time to investigate scholarships and other aid."