January 05, 2007
Friday PM

As college costs rise, so does parents' anxiety over how they're going to pay for it.

In the past year, the cost of tuition and fees at a four-year public university rose by 6 percent. And if your kid wants to attend a private school, you're looking at roughly $35,085 a year - enough to buy a sporty BMW.

For some parents - those whose kids are seniors this year - anxiety will increase this month as they start to fill out the long, sometimes mind-numbing financial aid applications required at most universities.

These days, even affluent families often need help paying for college because they haven't saved enough to cover the full cost. For lower-income families, the cost of a university education can be truly daunting.

Even so, parents should not give up on the idea of college just because they think they can't afford it, college financial aid directors say. Help is available in the form of grants, scholarships and loans that, for the neediest students, can cover the entire cost of a college education.

Even wealthier families can take out loans guaranteed by the federal government.

"You have to be realistic," said Janet Lockhart, director of financial assistance at Pepperdine University. "Realize you're going to have to borrow and your child is going to have to borrow. You have to be willing to help yourself in this situation."

For most families, the first step will be filling out the FAFSA, the Free Application for Federal Student Aid. The application, which is available online, should be filed as soon as possible after Jan. 1, even if parents haven't completed their income tax forms yet.

Private colleges also may require a second financial aid form, the CSS/Financial Aid PROFILE.

Then there are scholarships, which are available to all students, regardless of their family's income. In looking for scholarships, families should be wary of any company that guarantees it will find money, said Susan Young, senior financial aid counselor at California State University, Channel Islands.

It's worth students' time to apply for scholarships, Young said. "Lots of scholarships go unclaimed," she said. "You hear that all the time, but it's really true."

Most financial aid, however, comes in the form of loans - nearly 70 percent. For parents, there are PLUS loans (Parent Loans for Undergraduate Students), which are guaranteed by the federal government.

For students, there are Stafford loans, which can be subsidized, meaning you don't have to pay interest while you're in school, or unsubsidized, meaning you will be charged interest while you're in school.

It's all a bit overwhelming, but financial aid officers recommend families consider college an investment. Adults who earn bachelor's degrees will earn far more during their careers than those who have only high school diplomas. The difference over a person's lifetime can be as much as $1 million, according to the U.S. Census Bureau.

Because college is an investment in the students' future, parents should consider having their kids contribute to the cost, officers said. Students can work a summer job, and during the school year they can work 12 to 15 hours a week.

They're not in class 40 hours a week, said Pepperdine's Lockhart. Besides, having a job teaches students responsibility, she said. And students who help pay for their classes may be more likely to show up and take them seriously.

"Kids need to invest in themselves also," Lockhart said. "They're gaining the benefit."

On the other hand, it doesn't always make financial sense for students to work so many hours that they can only go to school part time, officers said. Here's the thinking on that: Students will make less money during college than they'll make after they graduate. So it might be financially smarter for students to borrow money during college so they can attend full time, then pay it back when they're making more.

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