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THE ABCs OF SAVING FOR COLLEGE : Matters of Degree : A B.A. Is More Within Reach Than Many Think


When Adele Sagun told her father she wanted to attend Amherst--a small, private and expensive East Coast college--he laughed.

"Every parent would like to send their kids to college. But she started telling me about the cost, saying it costs $10,000 or $20,000 a year," says Jesus Sagun, an Alhambra-based electronics technician. "At this point, I have nothing saved. I am up to the hilt in debt. I started laughing. What was I supposed to do?"

Of course, parents don't consider college costs a laughing matter. Higher education is expensive. Really expensive.

The average cost of college currently ranges between $5,600 and $19,000 per year, according to the College Board's annual college-cost survey. Next year--when today's high school seniors enroll--those costs are likely to have jumped between 4% and 10%--a rate of increase that substantially exceeds the rate of inflation, college experts note.

For parents with high school-age children, the impending price tag may seem insurmountable. Amounts this large are difficult if not impossible to swing out of income. And few started saving for college when the kids were still in diapers.

But there are ways to swing the expense. Parents and students simply need to educate themselves on the ABCs of financial aid for students and last-minute planning techniques.

A is for Academics, Athletics and Aid

You're not poor, so you assume you can't qualify for financial aid for students? Big mistake.

Families with modest income and assets do qualify for more aid than middle- and upper-middle-income applicants. But some funds are given out on the basis of merit: the academic and athletic scholarships.

Some of these are national and well-known, such as the National Merit Scholarships for students who do exceptionally well on the Preliminary Scholastic Aptitude Test. But thousands of others are local or college-specific.

For example, Lebanon Valley College, a private liberal arts school in Annville, Pa., gives scholarships equating to 50% of the college's tuition to any student who graduates in the top 10% of their class. That's worth about $7,000. Those in the top 20% get scholarships amounting to 30% of the price, while those in the top 30% get up to 25% of the tuition paid for them, a college spokeswoman says.

And for the athletic, there are scholarships ranging from a few hundred dollars to the full cost of tuition. And they're not just for football.

Depending on the university's sports program, your skills and your gender, you could receive money for playing anything from basketball, baseball and soccer to tennis, judo, archery, golf, wrestling, bowling and squash.

Still, the vast majority of financial aid for students is need-based. To qualify, students and their parents must fill out an extensive form called the Free Application for Federal Student Aid. Some universities require a second aid application as well.

Once the so-called FAFSA is complete, it is sent to a service that assesses how much you and your family can contribute to the cost of college. This assessment is based on a formula that takes a look at the income and assets of the parents and student and how many people are in the family.

In the end, parents are expected to contribute an amount equivalent to between 6% and 12% of their "available" income and assets each year.

Students usually are expected to contribute a larger portion of their income and a much larger--about 35%--portion of their assets each year. The combined amount--parents and student--is the total expected family contribution.

This analysis is forwarded to the colleges you've chosen. Those colleges determine your need by looking at the actual expense of attending their school compared to what your family can pay.

The college then puts together a financial aid package that aims to fill the gap between what you're able to pay compared to what it actually costs. The package is likely to include a conglomeration of scholarships, grants, loans and work-study arrangements.

Here's the good news: Many colleges--particularly the pricey ones--have adopted something called "100% need" formulas. What that means is no one is turned away because of finances. As long as you apply for aid early--that usually means by early January for the following September semester--your aid package will fill the entire gap.

B is for Budget, Bargain and Borrow

One of the many things parents don't know about financial aid is that it is not designed to simply cover the cost of tuition and fees.

Aid packages are expected to address the total cost of college, which includes room, board, books and incidentals. Where tuition, fees and book expenses are fairly tangible, the cost of a student's room and board, transportation and other expenditures--which are all figured in when determining how much aid you need--are estimates. And sometimes they're high--or take into account costs that you simply take for granted.

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