College Aid Can Be Confusing for Parents
Spring is in the air, and letters announcing college financial aid awards are in the mail. This year, those letters are likely to cause confusion and concern among the college-bound and those who pay their bills.
The reason: More students are eligible for aid but there are few additional aid dollars to go around.
Congress has tinkered with aid eligibility in recent years, making more middle-income families able to apply for aid. Yet Washington has not authorized anywhere near enough money to pay for all the eligibility it created. And as colleges have become less able to meet everyone’s needs, they’ve become less forthcoming with details about what aid they are offering, says Jack Joyce, director of guidance services at the College Board in New York.
“Colleges have a big pot of eligibility and a small ladle of aid,” Joyce says. “It’s a rare situation where a school can meet full need anymore. But colleges are actively competing for good students, so they try to put the best face on it.”
Most colleges used to compare their aid awards with the total cost of attending college--tuition and fees as well as estimated costs for books, room, board, transportation and incidentals. But some now provide just the cost of tuition and fees in their letters. That might give parents the impression that aid will cover a greater share of the bills than it actually will.
Moreover, other colleges are including information about unsubsidized loans, which technically are not aid.
Guidance counselors have been clamoring for a standard award letter, Joyce says. “The likelihood of that happening during our lifetime is remote. It becomes incumbent on the family to be a little more aware.”
To make apples-to-apples comparisons of aid awards, check out the College Board’s Web site at https://www.collegeboard.com, where you can compare the total cost of attendance with how much will be covered by grants, loans, work study awards and you. Up to four schools can be compared at once. (If the colleges did not provide figures for the total cost, the College Board’s site can provide them if you search by school.)
If you can’t afford the costs not covered by aid, here are some strategies to consider.
* Look for more. College aid-award letters include only federal, state and college-based aid. There are thousands of private donor scholarships and awards, from sources ranging from General Mills to the Garden Club of America. Fraternal groups and clubs also frequently sponsor scholarships.
The Web provides a fast and free way to search for these awards at https://www.fastweb.com, https://www.mapping-your-future.org and https://www.wiredscholar.com. After filling out a form, visitors to these sites will be given names and addresses of contacts for dozens of private scholarships.
Many of the scholarships are modest--a few hundred dollars each. However, each dollar your scholar gets in free money is a dollar that you, he or she won’t have to pay.
One word of caution: Don’t pay anyone to search for scholarships for you. Some companies charge up to $400 and “guarantee” results. But the Federal Trade Commission says these guarantees are largely bogus. Besides, you can do as much--or more--to find scholarships yourself for free.
* Consider payment plans. If your biggest problem with college bills boils down to cash flow--you can pay, but not all at once--ask the school about monthly tuition payment plans.
Most colleges offer some form of installment plan. Typically, you’ll pay a small fee to enroll or the college will charge a small amount of interest on the loan. Either way, the stretched-out payments can make the costs a little easier to budget.
* Appeal. If you think your aid award is too low because you’ve had a change in circumstances--a job loss, a death in the family, a divorce or a major medical expenditure--contact the college financial aid office immediately.
Aid awards usually are based on year-ago financial data, and most colleges are willing to boost their awards if your financial situation has deteriorated in the meantime, according to USA Funds, an Indianapolis company that guarantees student loans.
* Budget. The nonnegotiable costs of tuition, books and fees generally account for only about half the total cost of college. The rest of the expenses, including room and board, travel and incidentals, can be reduced by students willing to bargain-hunt or live at home, if feasible.
* Borrow. Subsidized student loans, such as Stafford and Perkins loans, are part of financial aid packages and should be included in your aid award letter. However, there also are PLUS loans, which can be used to finance the entire cost of undergraduate education. They aren’t subsidized, but the government does set maximum rates, which currently can’t exceed 9%.
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Times staff writer Kathy M. Kristof, author of “Investing 101” (Bloomberg Press, 2000), welcomes your comments and suggestions but regrets that she cannot respond individually to letters or phone calls. Write to Personal Finance, Business Section, Los Angeles Times, 202 W. 1st St., Los Angeles, CA 90012, or e-mail kathy.kristof@ latimes.com. For past Personal Finance columns visit The Times’ Web site at https://www.latimes.com/perfin.
