Paying for College

A crucial step in preparing for college is figuring out how to pay for it. The process can be daunting, and getting through it can be one of the biggest obstacles in enrollment, especially for low-income, African-American and Hispanic students.

Making it more difficult is the fact that financial aid has not kept pace with college costs; that help increasingly depends on good grades; and that schools are relying more heavily on students and parents to take out loans.

But the up side is this: While college is expensive, some people overestimate how much it will actually cost and underestimate how much financial aid they may receive. The best strategy is to apply for aid, no matter your income, and see what is available. With today's rising costs, many people cannot afford to foot the bill alone, and help is out there.

The U.S. Department of Education's Federal Student Aid (FSA) programs are the largest source of student aid in the United States, providing more than $60 billion a year in grants, loans, and work-study assistance.

To apply for need-based financial aid from the federal government, fill out the Free Application for Financial Aid (FAFSA). You fill out the FAFSA after Jan. 1 of your senior year of high school, and renew it each year after that. You apply even if you have not yet been notified whether you've been accepted to a college.

To fill out a FAFSA online, visit http://www.fafsa.ed.gov. You can even “chat” live online with a customer service representative for help. You should receive a Student Aid Report (SAR) within four weeks of completing the form.

When you fill out the forms, you list the colleges where you intend to apply and the U.S. Department of Education and the College Board send financial information to the colleges.

Generally, the applications will require your most recent tax forms and W-2 forms. Both forms are also available through your high school guidance counselor.

A guide to federal aid programs:

	Federal Pell Grants: Pell Grants are need-based grants, meaning they don't have to be repaid. The maximum grant for 2004-2005 is $4,050.
	Federal Direct and FFEL Stafford Loans: William D. Ford Federal Direct and Federal Family Education Loans are the federal government's main form of self-help aid. Both the Direct Loan and FFEL programs consist of what are generally known as Stafford Loans, for undergraduate and graduate students, and PLUS Loans, for the parents of dependent undergraduates. You receive FFEL funds from private lenders, such as banks and credit unions. Direct Loan funds come from the federal government to your college, which delivers the loan proceeds to you. Often, a school will participate in just one of these programs, but sometimes will participate in both. You can receive both FFEL and Direct Loans, but not both types for the same period of enrollment at the same school.
	Federal Campus-based Programs: The federal government provides money to colleges to give to needy students through three federal campus-based programs. They are: Federal Supplemental Educational Opportunity Grants, or FSEOGs, are for undergraduates with exceptional financial need. A FSEOG doesn't have to be paid back. You can receive between $100 and $4,000 a year. The Federal Work-Study Program provides jobs for undergraduate and graduate students with financial need, allowing them to earn money to help pay education expenses. A Federal Perkins Loan is a low-interest (5 percent) loan for both undergraduate and graduate students with financial need. Your college is your lender, with funds from the government and the school. Each school sets its own deadlines for students to apply for campus-based funds. The deadlines are usually earlier than the deadline for filing a FAFSA (for 2004-2005, June 30, 2005). Check deadlines with the financial aid offices of the schools you're interested in.
	State Financial Assistance: Some states offer financial assistance directly to individual students, which can be need-based or merit-based. For more information, call or write your state's higher-education agency.
	College/University Assistance: Colleges themselves provide aid to many of their students. Most of this institutional aid is in the form of scholarships or grants, which do not have to be repaid. Some is need-based and some is merit-based. Contact your college financial aid office for information.
	Other Types of Assistance: Organizations such as corporations, labor unions, professional associations, religious organizations, and credit unions, sometimes award financial aid. In addition, some organizations, particularly foundations, offer scholarships to minorities, women, and disabled students. To learn more, visit a public library and look for directories that list scholarships, or check on the Internet. College admissions offices and high school guidance counselors should also be able to provide more information about scholarships.

For more information:
For information about student aid supplied by the federal government, call the Federal Student Financial Aid Information Center toll-free at the U.S. Department of Education at 1-800-4FED-AID. For a guide to federal financial aid for students called The Student Guide, call the U.S. Department of Education or write:

Federal Student Aid Information Center
P.O. Box 84
Washington, DC 20044

From the College Board:

	Financial Aid Myths
	2003-2004 College Costs: Keeping Rising Prices in Perspective
	529 Plans: Look Before You Leap: What You Should Know About College Savings Plans
	Financial Aid Calendar: Apply Early. Apply Right
	How to Compare Aid Awards
	Your Family's Financing Options: When the Family Share is More Than You Can Afford
	10 Essential Borrowing Tips