Home & Family Finance Resource Center

Wednesday, November 25, 2009

There's still time to find money for college

McLEAN, Va. (8/17/09)--If you're in the process of packing up your son or daughter for college and worried about how you're going to pay for it, here's good news: There are still sources of funding available (USA Today Aug. 11).

The bad news: College prices continue to rise. The average cost of attending a public four-year university for the 2008-2009 school year was $6,585--up 6.4% from the previous year. And if you're attending a private school, expect an average price tag of $25,143 (collegeboard.com). If you multiply those numbers by four years and figure in inflation, you're laying a lot of money on the table.

Consider these options for financial assistance:

• Federal student loans. This should be the first place you look for loans. To apply for a federal student loan for the 2009-2010 school year, you must submit a federal application for financial aid (FAFSA) by June 30, 2010 at midnight. (Note: the deadlines for your state or college may be different from the federal deadline--check fafsa.ed.gov/before003a.htm for details.) You can receive grants that do not have to be repaid, work-study, or Stafford loans--either subsidized or unsubsidized, or both. Full-time dependent students can receive up to $5,500 in loans their first year, and the amount increases for second- and third-year students. You can find the FAFSA form, as well as more information, at fafsa.ed.gov.

• PLUS loans. Parent PLUS loans are federally guaranteed loans carrying a fixed rate of 8.5%--a little higher rate than some private loans, but you won't have to worry about the interest rate rising. Securing a PLUS loan does not require a high credit score; however, a foreclosure, bankruptcy, or debt more than 90 days overdue could disqualify you.

• Private loans. Although many lenders have tightened their standards, private loans are still available for students--after you've exhausted all other sources of aid. Credit unions generally offer loans at lower rates than for-profit lenders--ask your credit union loan professionals for more information. Further, a group called Credit Union Student Choice works with more than 80 credit unions to make private loans available for college students. Visit studentchoice.org for details and to view a list of participating credit unions and colleges.

• Financial aid. Although most financial aid packages are awarded in the spring, if you have suffered any financial setbacks--such as a job lay-off--you may be able to appeal to the university's financial aid office. Most colleges can take the current year's income and assets into consideration.

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  Your university's financial aid office also may let you set up an extended-payment plan. With this option, you can pay your tuition bill in monthly installments, instead of one large payment. To set up a plan, you may have to pay a fee of $50 to $100.

  For more information, read "Tough Times Series: Getting Student Loans During the Credit Crunch" in Home & Family Finance Resource Center.