Unraveling the Financial-Aid Riddle: Programs Help Families Handle Costs of College
Fagan, Amy, The Washington Times (Washington, DC)
A family sits around the table surrounded by college applications and forms. As they wade through the mire of college choices and start to weigh the options, they quickly realize that they do not have the funds to finance college on their own. The cost is simply too high.
Financial aid is complicated and often confusing. What constitutes need? What kind of financial aid is available? What's best for me or my child, and can I get it?
In 1996, the average cost of one year of room, board and tuition at an in-state public four-year college was $7,000, according to the Department of Education. The average cost of the same at a private four-year college was $17,600. The cost of room, board and tuition this year at Western Maryland College in Westminster, Md., is $22,200.
"The cost of running a college continues to rise, so in turn tuition rises as well," says Patricia Williams, director of financial aid at Western Maryland College. "Renovations, salary increases and the constant change of technology all affect this. I cannot imagine college costs not rising every year."
Of the 15 million students enrolled in two- or four-year colleges in 1997, more than 50 percent of them receive financial aid of some kind.
Financial aid is any money that a student receives toward paying educational expenses, says Marjorie Nieuwenhuis in her book, "A Parent's Guide to College Admissions." The bulk of aid comes from the federal government, state treasuries and the college's own funds. Only one-half of 1 percent comes from the private sector.
Federal aid comes in the form of grants, which are gifts that are not repaid; loans, which are repaid by either the students or the parents; and programs, such as the federal work-study program.
Federal Pell Grants range from $400 to $3,000 per year and are available to undergraduate students whose families have low-to-moderate incomes. In addition, there are federal Supplemental Educational Opportunity Grants, ranging from $500 to $1,500 per year, provided for students who are Pell Grant recipients and have exceptional financial need.
"It's hard to say a distinct income range" for Pell Grant recipients, says Jane Glickman, a spokeswoman for the Department of Education. "But generally those within the $40,000 to $50,000 or less combined income range qualify for a Pell Grant."
There are several types of federal loans, explains "The Student Guide 1997-98," which is compiled each year by the Department of Education's Office of Secondary Education. Two examples of loans are the Perkins Loan for undergraduate or graduate students with exceptional need, and the Parent's Loan for Undergraduate Students, or PLUS loan, which has a low-interest rate and is determined by a family's credit history.
Direct Stafford Loans - the most common loans - are funded by the federal government through schools. The Federal Family Education Loan Program is similar, except that the funds come through a bank, credit union or lender that participates in the program.
APPLYING FOR FINANCIAL AID
To apply for federal student aid, a family should complete and return the Free Application for Federal Student Aid (FAFSA).
A financial-aid processor at the Federal Processing System in Iowa City, Iowa, determines the "Expected Family Contribution," or EFC, by looking at the family's income, savings and investments, as well as other information. The resulting Student Aid Report indicates the amount of money that the family is expected to contribute toward their child's education.
The college financial-aid officer subtracts the EFC from the estimated cost of attending that college, minus any scholarships previously received. The result is the financial aid that the student is eligible for. Typically, the lower the EFC, the higher the financial-aid eligibility. …