Financing College Exploring Your Options.

The cost of college goes up every year. But if you want to go, you can find a way to meet those costs.

Think of college as an investment in your future. Studies show that college graduates earn 77 percent more than those with only a high school diploma. If you look at the potential earnings, you really can't afford not to go.

College can be a hefty investment, though. Peterson's Guide to College estimates that four years at a private college can cost up to $100,000; the same degree from a state school could run $30,000 to $50,000. But don't let sticker shock scare you away. Approximately $68 billion in aid was available this year, according to a study released by the College Board this April. The federal government distributed $30 billion to 7 million students; colleges distributed another $8 billion. The remaining aid came from a variety of sources.

How Financial Aid Is Figured

To find out about a financial aid package, start with the school's "cost of attendance." This is the amount it costs a student to pay for the whole experience--tuition, fees, books, room and board, transportation, and personal expenses.

Subtract from that amount the "Expected Family Contribution (EFC)," calculated from the financial information your parents submit concerning both income and expenses of the family. EFC should be funded out of cash, savings, and loans, and not from current earnings alone.

Don't panic if the difference looks like more money than you can afford. It's the amount that needs to be financed with aid. Financial aid specialists recommend you apply for aid whether or not you think you'll qualify. Submit the FAFSA (Free Application for Federal Student Aid) and any forms the school requires. Above all, meet the deadlines.

The financial aid office will put together a package with a combination of the four basic forms of aid: scholarships, grants, loans, and work-study.

1. Scholarships

Scholarships are the best form of aid because the money does not have to be repaid. The application process often requires you to write a special essay or be interviewed. Scholarships are generally awarded for merit.

Scholarship sources can include the college itself, civic clubs, unions, foundations, and religious groups. Most states offer scholarship programs to residents to attend in-state colleges. Usually, these are awarded based on grades and financial need.

To find out what's available, a good place to start is the scholarship database at www.finaid.com and similar sites. Check out "Searching for Scholarships" on pages 4-5 of Career World. Beware of services that ask you to pay a fee to locate money--they usually are scams.

2. Grants

Grants are also awards of money that do not have to be repaid. Unlike scholarships, the primary eligibility requirement for a grant is financial need. Need is calculated using a formula established by the federal or state government. The largest grant program is the Pell Grant, funded by the federal government. Students received up to $3,300 in the 2000-2001 academic year the amount increases slightly from year to year.

3. Loans

Loans are financial aid that you have to repay. Fifty-nine percent of all aid is in the form of loans; the average student graduates with a loan/debt of $16,500.

The best source is the Federal Stafford Loan program. You won't begin making payments until you leave school. Students with exceptional financial need may qualify for the federally funded, campus-based Perkins Loan.

Your parents may qualify for a PLUS (Parent Loan for Undergraduate Students) as a way to cover the EFC (Expected Family Contribution). Home equity loans or a line of credit are also possibilities.

4. Work-Study

The fourth form of aid is work-study. The work--study program on most campuses is a two-part program. In order to qualify for federal work--study, the student must meet federal eligibility based on financial need. The college provides the job, but the federal government pays part of the wage (the student doesn't see a split check, but this makes a big difference to the institution's ability to hire students). The college also might offer institutional work-study, which has no eligibility requirements other than the student be qualified to do the job. Usually students are allowed to work 20 hours a week Pay is minimum wage unless the job they fill is more specialized. Students often work as lab assistants in computer labs, shelvers in the library, and clerks. They may also do data entry and filing in college offices, and so on. The main advantages are that the work is on campus, the employer works around the student's schedule, and the student has the ability to make contacts or get experience if the work is i n the area of his or her major.

If you're willing to commit several years after graduation to work for the government or another agency, you can work a deal. Government agencies at both the state and federal levels offer "loan forgiveness" or scholarship programs. A scholarship program pays your costs upfront. In a loan forgiveness program, you pay for college upfront with loans, etc., and the agency pays off the loans for you. Federal programs include the National Service Scholarship Program, AmeriCorps, Learn and Serve America, and Senior Corps. States often offer loan forgiveness to students in under-represented fields such as teaching and health care.

The military will fund college with a similar arrangement. Last year, more than 50,000 students enrolled in campus ROTC programs; 17,500 of those have scholarships. Veterans and their dependents also may qualify for special aid money.

Cutting Costs

In addition to applying for aid, think about ways to reduce costs. Forty-four percent of students begin at lower-priced community colleges. After evaluating all her aid offers, Tracy Turner decided to go this route. "Both my parents are in college and own their own businesses, so there's not a lot of money. I can get my prerequisites and then transfer. The courses are the same, but the cost...wow, what a difference!" A number of four-year institutions offer scholarships to students who transfer from community colleges.

In high school, look into concurrent enrollment at a local college to get some requirements out of the way early. Take as many advanced placement classes as you can. That way, you'll have fewer classes you'll need to pay for in college.

Plan to work. Even if you aren't eligible for work-study, consider working either during the school year or during the summers. Think about co-op experiences during college so you can get paid for work experience related to your field.

As with any big investment, take time to plan and explore your options. Then watch that investment pay off!

Your College Checklist

Start planning early to maximize your investment, even before high school. Then follow this guide:

9th & 10th grades: Do your part.

* Consider the kind of college you will need to meet your career goals.

* Build up your skills and your GPA.

* Start a savings account. Consider investing in a state-sponsored IRS Section 529 plan that is tax-deferred.

* Talk seriously with your parents about finances.

11th grade Make a plan.

* During college visits, talk with the financial aid office. Find out what percentage of students receive aid and in what form.

* Get the application. Study the catalog for scholarships.

* Note deadlines; they'll be about the same next year.

* Make sure your parents have their financial papers in order.

12th grade: Apply to the colleges first worry about paying for it second.

* Fill out the FAFSA.

* Keep track of deadlines and follow-up requirements.

In college: Keep working on your plan.

* If you have a scholarship, follow the guidelines for GPA or service so you'll keep it.

* Reapply for aid every year by the deadline.

* Make sure your parents know they can claim lifetime learning credit on their tax returns.