Financing college: finding grants, loans, scholarships and work-study.

"FILL OUT THE FAFSA." That's the familiar refrain from financial aid offices across the state. The Free Application for Student Aid, FAFSA, is an essential part of college financing because it determines what federal aid will be available, and therefore what other sources of financing, like state grants and loans, are needed to fill in. The information is also used by states, including Indiana, as well as colleges and universities.

Phyllis Schroeder, associate director of financial aid, Valparaiso University, says she occasionally hears people say they won't file the FAFSA because they make too much money. The application determines the expected family contribution, or EFC. She recommends everyone fill it out, even those making more than a $100,000. "Families are often overly pessimistic. It costs them nothing." The largest federal grant program is the Pell grant, she says, for the neediest students at $4,310 a year.

If a family is facing financial challenges not reflected on the FAFSA, like a family member in a nursing home or high medical expenses, they should talk to the financial aid office, she urges. "There is some latitude. Never give up on school." And don't rule out private schools automatically, she stresses, thinking they are a whole lot more expensive--and they are. "Private schools have more gift aid." Compare the bottom-line costs after all the aid packages are on the table, she urges. "Indiana state grants are very helpful. A student with the highest needs and academic honors can get up to $11,000 a year for private school in the state of Indiana."

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A package of grants, gift aid and academic scholarships, work-study and loans is presented when the student applies. "Ninety-two percent of our first-time students receive some sort of financial aid," says Schroeder. "The average financial aid package is $19,800 in gifts, loans and work." Without any assistance, tuition, room and meals would be $32,350 a year. "We try to guarantee them a similar level of gift aid through their time at Valparaiso," she says. "If Morn loses her job, it could go up, if they win the lottery, it would go down."

At the University of Evansville, director of financial aid JoAnn Laugel encourages students to apply for scholarships. "Every college and university has its own mechanism for awarding institutional dollars," she says. In the spring of their senior year, high school students should also apply for private scholarships to go to any college, using information from their school's guidance counselor. Many scholarships are available within communities, she says, from churches to the student's part-time job to the parent's employers. "You're certainly a bigger fish in that pond." And don't fall into the "It's only $500, so I didn't apply" trap. Multiply that by two, three and four times, and it really adds up.

There's more borrowing for college now, she says, including more private borrowing. The federal Stafford student loan program allows up to $3,500 in subsidized loans for freshmen this year, more for later years, now at a fixed rate and payable after graduation or leaving school. "Families are not saving for college," says Laugel. "They haven't been able to or haven't made the choices to save for college. So they have been borrowing more." At the University of Evansville, 19 percent of the $19,000 in total average aid in 2006-2007 was loans. The last group of seniors owed an average of $17,600 for four years.

At Indiana Tech, Fort Wayne, the average student loan debt after four years is $21,000, says Terri Vasquez, director of financial aid. Most students come with some type of loans and 80 percent come in with some kind of grants, she says. Tuition at the private school, known for its engineering, business, criminal science and computer studies programs, is $19,200 per year; add room and board and it's a total of $26,000. "We're probably at the lower end of the privates," she says. After the FAFSA is in, they take an institutional application for Indiana Tech endowment scholarships, she says, to make the school more affordable for students.

"Mission: Possible!" is an excellent resource for students and their parents, says Vasquez. The 42-page online booklet contains a toolkit that helps students and parents plan for college, and can be found on www.thesalliemaefund.org.

An Indiana-specific Web resource is www.triptocollege.com, operated by the Indiana Youth Institute with a grant from Lilly Endowment. "The parents were telling us that they are overwhelmed with the whole prospect of sending their child to college with all the information that's out there; with what they read about tuition rising faster than inflation." says Bill Stanczykiewicz, president. "So we created Trip to College, as a way to provide all of that complex information in an easy to use format. We kind of like to say we've taken a fire hose of information and turned it into a cool drinking fountain that's much easier for parents to utilize."

The Trip to College Web site includes information on Indiana's seven public university systems and 31 independent colleges and universities. Users can search for schools by curriculum, such as aeronautics, business or fashion merchandising, then compare up to four schools at a time. Tuition, average financial aid awards, percent of students receiving aid and merit-based aid availability is listed by school.

Parents can start saving early for those increasing college costs by opening a qualified tuition plan under Sec. 529 of the Internal Revenue Code. Each state runs its own show; in Indiana it's called the CollegeChoice 529 Investment Plan, governed by the Indiana Education Savings Authority and administered by JP Morgan Funds Management. The money grows taxed-deferred and qualified withdrawals from an account are state and federal tax-exempt. Beginning this year, it gets even better for Hoosiers. You can claim a 20 percent income tax credit, worth up to $1,000, on your contributions.