Articles » Paying for College:
How to Pay for College in This Economy
by Carol Tice
You’ve sweated the grades, taken the tests, and now – congratulations! You’ve gotten into college. And you’ve got your tuition all saved up, right?
No? Then it’s time to sit down with your parents and figure out how you’re going to pay for it. Student aid money comes from three main pots – the federal government, your state, and your school. The best type of aid is a grant, which won’t have to be paid back. Beyond that, you or your parents may get a variety of loans.
Here’s a quick rundown on aid programs for the upcoming ‘09-’10 school year.
THE FEDS
President Obama’s stimulus bill improved the federal aid programs, and the budget currently being kicked around in Congress may bring more changes. As things stand right now, here’s what the federal government offers:
Grants:
• Pell Grant – These grants are based on financial need. Good news here: the stimulus bill kicked up the amount you can get from $4,731 per year to $5,350.
• Academic Competitiveness Grant (ACG) – Pell-eligible students may get $750 here for their first year of college, $1,300 for the second year.
• National SMART Grant – Pell-eligible college juniors and seniors with good grades and specific math, science, technology or foreign-language majors can get up to $4,000 a year.
• Teacher Education Assistance for College and Higher Education (TEACH) Grant – students with good SAT scores and grades who’re willing to commit to teaching in a low-income district after graduation can get up to $4,000.
Loans:
Stafford Loan: Financially needy students get a subsidized interest rate on this loan, which is open to all students. The subsidized rate for the coming school year is 5.6%, unsubsidized is 6.8%. Up to $12,500 is available.
PLUS Loan: Parents and grad students may obtain these loans. You can borrow between $5,500 and $7,500, depending on year of study. The rate depends on whether you get this loan through the Direct Loan program administered by the U.S. government, or the Federal Family Education Loan (FFEL) program, which is administered by banks. Direct rate is 7.9%, FFEL is 8.5%.
Recently, it’s been difficult to get FFEL loans due to banks’ tougher loan requirements. Stay tuned on this one – Obama wants to eliminate the FFEL loans altogether, due to the fees the feds pay banks for their participation.
Learn more about federal loan programs here: http://studentaid.ed.gov/PORTALSWebApp/students/english/funding.jsp
THE STATE
With the down economy, state aid levels are in flux, with some expanding and others shrinking their offerings. New York, for instance, fully funded its existing tuition assistance program, and added a new one for the ‘09-’10 year. Kathy Crowder, senior communications VP at The New York State Higher Education Services Corporation, says the new NYHELPs program will offer fixed-rate loans of up to $10,000 a year at reasonable rates, for state residents attending in-state schools. http://www.hesc.com/content.nsf/SFC/New_York_Higher_Education_Loan_Program_NYHELPs
In Washington State, by contrast, admissions director Janet Cantelon of Seattle University says she’s expecting reduced state aid due to massive state budget shortfalls.
Whether your state is flush or in financial trouble, be sure to investigate what state grants, loans or scholarships you might be qualified to receive. Get started by checking with your state higher education agency: http://wdcrobcolp01.ed.gov/Programs/EROD/org_list.cfm?category_ID=SHE
YOUR SCHOOL
Schools can be one of the biggest sources of student aid. Many offer scholarships and grants from their own funds. Some may be increasing their student-aid offers in the coming year to help students affected by the bad economy. Seattle U’s Cantelon says her school’s board approved increased funds to be spent to make up any state shortfall and to help distressed students.
“We are anticipating, as the economy continues to slow, that we’ll start having more conversations with students with unexpected financial problems,” she says.
Schools also administer some federal aid programs, including:
• Federal Supplemental Educational Opportunity Grant (FSEOG) – You may be able to get up to $4,000 more here – if your school participates, and has funding available.
• Perkins Loan: Participating schools administer these federal loans for needy students. Up to $4,000 per year can be borrowed at 5% interest.
OTHER ANGLES:
• Private scholarships & grants. A range of foundations, corporations and other sources offer money to students that meet specific criteria. You can search for private funds you might qualify for here: https://studentaid2.ed.gov/getmoney/scholarship/scholarship_search_select.asp?4971
• Work-study. Federal and state programs may help you get a job on- or off-campus while you’re in college by subsidizing part of your wages. The stimulus bill increased the funds available for the federal work-study program.
• Tax breaks. Paying less in taxes can also help free up money for college. The stimulus bill improved the Hope credit (now known as the American Opportunity education grant). Your parents can get a full credit for up to $2,000 of tuition expenses, and 25% of the next $2,000 spent, up to certain income limits. Previously, the Hope was good for only $1,800 and only the first two years of college.
Business reporter Carol Tice has written frequently on college topics for the Seattle Times.
