College Admission Help

College Costs 101 – College Grants, loans, scholarships and savings can open door
By Mark Glover
Sacramento Bee
Numerous state officials will tell you that getting a college education in California is still a bargain compared with the price of college in other states.
But the Golden State has been closing the gap on those pricier states of late.
With the latest round of increases approved this month by the University of California and California State University systems, the cost of a college education in California has climbed more than 70 percent since 2001, including the adjustment for inflation.
UC regents recently raised student fees 9.3 percent. Fees will increase by $662 for California resident undergraduates, who should expect to pay about $8,700 in fees for the coming academic year. Fees will rise $750 for in-state graduate students.
The CSU system recently voted in a 10-percent increase for next year. Student fees will increase $306 for undergraduates, $354 for teacher credential students and $378 for graduate students. Including the average campus fee of $801, the typical cost for CSU undergrads next year will be $4,155.
Both systems cited the need for additional revenue as California struggles with its budget. Perhaps most ominous, the future outlook of the state budget is bleak, at best.
"It is never an easy choice to raise fees, but we are faced with a dire state budget, and (Wednesday's) increase is necessary to maintain and operate our university campuses," CSU Board Chairman Jeffrey Bleich said after trustees met.
And the rising fees can reflect only a small fraction of total costs, especially for students who go away to school. Sallie Mae, the leading provider of student loans, estimates the freshman year for a California student at most UC campuses will cost more than $30,000 in tuition, fees, room and board and books, while some CSU schools run more than $12,000.
Many top private schools are estimated at more than $50,000 for the first year.
Bleich offered some financial advice for students: "It is critical that students get their financial aid requests in. This year, benefits for programs such as the Pell Grant are more generous than ever. Through financial aid and grants, nearly half of our students will see no increase in their fees."
It's good advice no matter what college a student will attend. Here are some of the ways parents and students can pay for a college education:
BASIC SAVINGS PLAN
The good news is if you start early, you can accumulate a sizable amount of money over time. Saving just $100 a month over 18 years will net you $23,655, at 1 percent interest compounded annually. And more at higher rates of return.
FEDERAL STUDENT AID
The Free Application for Federal Student Aid – or FAFSA, for short – is filled out annually by millions of high school and college students nationwide. FAFSA eligibility is determined by a financial need formula based on numerous variables. Federal aid includes Stafford loans, Pell Grants and other assistance described below.
More details:
• www.fafsa.ed.gov or (800) 433-3243.
STAFFORD LOANS
A Stafford loan is offered to students enrolled in higher education institutions. It can be subsidized (based on financial need, with the government paying the interest if the student stays in school) or unsubsidized (not based on financial need, with the student paying the interest. Repayment can be deferred). The subsidized range is $3,500 for freshmen, $4,500 for sophomores and $5,500 for juniors and graduating seniors enrolled for one semester. The unsubsidized range is $5,500 for freshmen, $6,500 for sophomores and $7,500 for juniors and graduating seniors enrolled for a semester. A FAFSA application must be filled out in advance to become eligible. The fixed interest rate on Stafford loans has recently been 6 percent to 6.8 percent, although lower rates become effective this year.
More details:
• www.staffordloan.com or (800) 433-3243.
PELL GRANTS
The Pell Grant program is a federal college education program based on financial need. A FAFSA application must be filled out in advance to become eligible. Grants do not have to be repaid. A Pell Grant can pay nearly $5,000 for college, and the annual amount depends on program funding. The Obama administration has been a strong advocate of additional funding for Pell Grants.
More details:
• www.ed.gov/programs/fpg/index.html or (800) 433-3243.
CHAFEE GRANT PROGRAM
The California Chafee Grant Program is sponsored by the California Student Aid Commission and the state Department of Social Services for eligible youths who are or have been in foster care. To qualify, students must be eligible, or have been eligible, for foster care between the ages 16 and 18, and not have reached age 22 as of July 1 of the award year. A FAFSA application is required. Recipients qualify for up to $5,000 a year for career and technical training or college. No repayment is required.
More details:
• www.chafee.csac.ca.gov or (888) 224-7268.
CAL GRANTS PROGRAM
Cal Grants are geared to graduating high school seniors or recent high school graduates. Applicants must meet academic, financial and eligibility requirements and submit required forms, including the FAFSA application. Grant recipients can get up to $9,700 a year to pay for college expenses at any qualifying California college, university or career/technical school. Grade-point averages are part of the consideration process.
More details:
• www.calgrants.org or (888) 224-7268.
PLUS LOANS
Parents can borrow via a PLUS Loan to help pay the education expenses of a dependent undergraduate student enrolled at least half time in an eligible program at an eligible school. PLUS Loans are available through the Federal Family Education Loan Program and the William D. Ford Federal Direct Loan Program. Parents can get either loan, but not both, during an enrollment period. Application standards include a check of credit history. The yearly limit on a PLUS Loan is equal to the cost of attendance minus any other financial aid received. For example, if the cost of attendance is $6,000, and the student receives $4,000 in other financial aid, parents can borrow up to $2,000. The current interest rate is 7.9 percent.
More details:
• www.studentaid.ed.gov or (800) 433-3243.
529 COLLEGE SAVINGS PLAN
A 529 plan is a tax-advantaged college savings plan named after a section of the Internal Revenue Code. Money in the plan is not taxed as long as it is used for higher education purposes. Each state administers its own 529 plan. Besides a tax advantage, the 529 enables participants to build up a college fund with contributions over time, with a minimum initial investment of only $50 required. In California, the plan is sponsored by the state's ScholarShare Investment Board and managed by Fidelity Investments.
More details:
• www.scholarshare.com or (800) 544-5248.
COVERDELL ESA
A Coverdell Education Savings Account is a tax-advantaged investment account. While similar to the 529 plan, it can also be used to cover education expenses before college enrollment. Also, unlike 529 plans, there are restrictions on contributions ($2,000 per year). There are also limitations based on household income.
More details:
• www.irs.gov/publications/p970/ch07.html or (800) 829-1040.
STUDENT LOANS
Most major banks and other lenders, including Sallie Mae, offer student loans at interest rates that are favorable, and in some cases, negotiable. Some banks also offer interest rate reductions if applicants opt for services such as automatic payment withdrawals from a bank account. Colleges also offer emergency loans in some cases, but eligible amounts tend to be small.
SCHOLARSHIPS
High schools, community colleges and four-year universities offer numerous scholarships. The amount of monetary awards and niche fields of study for which scholarships are available run a wide gamut. Students beginning their junior year of high school are encouraged to work closely with their counselors to investigate the availability of scholarships. Likewise, students enrolled in college should regularly check with their advisers about scholarship availability. Many college Web sites and state/federal education assistance agencies have online links to free scholarship searches.
WATCH OUT
Here are some paying-for-college plans that most experts say are either bad ideas or are questionable in the current economic climate:
Home equity loans: The experts are divided on this one. But given the current availability of student loans at favorable interest rates and the volatility of California's real estate market, many experts say it pays to get a loan outside the equity realm. Others say it's OK if the equity loan interest rate you're quoted trumps other offers. If you do go the equity route, experts say you should lock in a favorable fixed rate.
Credit card advances: The experts are unanimous on this one: Don't do it. There are too many financial-aid options, scholarships and favorable-term loans available now to even consider the credit card route. Save the credit cards to pay for relatively inexpensive college needs.
Cashing in insurance policies: Again, the experts say there is plentiful financial aid available, making this an unwise choice. You can have an expert audit all your insurance policies, which might turn up a policy with limited benefit and good cash value. But the experts say that's going to be an uncommon occurrence. Under no circumstances should you cancel something like auto insurance, which is required by California law.


College Costs 101 – College Grants, loans, scholarships and savings can open door