Paying for
college
Parent Spot
for Parents of High School Students
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.
For permission to reprint this
article, please contact the Capital Region BOCES Communications
Service by e-mailing us at dbushsuf@gw.neric.org.
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