Paying for College

With college costs (room, board, tuition and fees) ranging from about $11,000 annually at SUNY to $30,000 or more at private colleges, you may think you have to knock over a bank to provide your child with a college education. But take heart! Plenty of parents are finding ways to make college a financial possibility, as evidenced by the growing number of young people who are continuing their education after high school.
 

How are they doing it?

One of the first places to go looking for answers is in the high school guidance office. The guidance counselors are more than happy to talk with parents, explain the different scholarships and loans that are available, and direct them to various books and articles on paying for college.

And don’t think you have to wait until your child’s junior or senior year to start your research and planning. The more you know and the sooner you know it, the better off you will be.
 

Plenty of free assistance

One warning from guidance counselors: Don’t be taken in by unscrupulous operators who want to charge you money to help you find college financial aid. There’s plenty of free assistance out there. For example:

Public libraries have educational sections with college financing information, pamphlets from specific colleges and Internet hook-ups for online research. Both guidance offices and public libraries keep copies of the financial aid application form, FAFSA – Free Application for Federal Student Aid – that colleges use as their formula for determining financial aid, and applications to federal and state financial aid programs.

The Internet is also an incredible resource. A "college financing" search yielded 1,543 sites. One, www.pueblo.gsa.gov, outlines college costs through the year 2017, and strategies for paying the sometimes shocking fees.

Some corporations or unions offer scholarships or tuition payment plans to their employees’ or members’ children.

Guidance counselors also recommend that students and their parents talk with financial aid officers at colleges they are visiting to get an idea of what financial aid they have available.
 

What can we expect?

One of the first questions parents often ask is a very personal one: What can we expect in the way of aid, given our family income and resources?

Jim Vallee, director of financial aid at the College of Saint Rose in Albany, said there are no hard and fast guidelines for determining how much financial aid a family might receive. He suggested using the need analysis calculator at www.hesc.com, under New York Mentor. "This will determine the estimated family contribution (EFC)," Vallee said,

After scholarships and grants are exhausted, loans become the way to go. The most common student loan is the Stafford loan. This federal loan allows dependent undergraduates to borrow up to $2,626 as freshmen; $3,500 as sophomores, and $5,000 for their remaining college years. Their variable interest rates are capped at 8.25%. The Perkins loan is awarded to students with exceptional financial need at a 5% interest rate, with a limit of $3,000 per year for undergraduates.

Parents of dependent students can take out PLUS loans, the federal Parent Loan for Undergraduate Students, to make up the difference between the student’s aid package and the tuition cost. Their variable interest rate is capped at 9%, and payment begins 60 days after the funds are fully disbursed, with a repayment term of up to 10 years.

NY College Savings Program

New York now offers a College Savings Program that allows residents to deduct up to $5,000 of annual contributions – or $10,000 for married couples filing jointly – from their taxable income to pay for college expenses. Investments are managed by TIAA, part of TIAA-CREF, a financial management service, and earnings are tax deferred. There’s no cost to open an account, which can be done with as little as $25.

There is a 36-month waiting period to withdraw funds, which can be used at any accredited educational institution globally. The money is invested based on a child’s age or a family’s comfort with risk. Two types of portfolios are managed by age, with investments in stocks and aggressive growth when a child is young, then in more conservative instruments as the child gets closer to college. There’s also a pure stock portfolio based on Standard & Poor’s 500, and a conservative, interest-rate sensitive portfolio that never goes below three percent.

New York’s College Savings Program started in September, 1998, and as of April 10, 2001, 147,295 people had contributed $642 million to it. To get an enrollment kit, call 1-888-722-9836.


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