Financial Aid

Average per-student costs for the 1988-89 school year totaled more than $12,500 at private colleges and almost $6,200 at public institutions, according to the American Council on Education, a nonprofit research group in Washington. That included tuition, fees, room and board, transportation, books and supplies.

Education costs have been rising much faster than inflation. In five of the past eight years, private college costs increased two to three times faster than the consumer price index, with public college costs rising only slightly less rapidly.

Series EE U.S. savings bonds will soon become an even more valuable tool in helping parents pay for their children’s college education. Starting next year, interest earnings on the bonds will become exempt from federal tax (they are already exempt from state and local taxes) for parents who meet certain income criteria, as long as the income is used to finance college educations.

To qualify, married couples filing jointly must have adjusted gross incomes of no more than $60,000. Single parents’ income must fall below $40,000.

The rate of student loan defaults was about 17.7% in California as of June 30, higher than the national rate of about 13% to 14%. The higher rate here stems in part from this state’s higher proportion of students in vocational or proprietary schools, where the default problem is most acute.

About 118 lenders provide student loans in California, but the top 10 account for about 90% of the money loaned, according to the California Student Aid Commission. The top 10 include Citibank, Bank of America, Chase Manhattan, Wells Fargo, First Independent Trust, Great Western Bank, First Interstate Bank, Wells Fargo N.A., Security Pacific Credit Corp. and Glendale Federal.