Find your way through the money maze

By Patti Jones
Seattle Times staff reporter

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Lyn Porterfield's kids are still young — ages 11 and 14 — but already she's worrying about the cost of higher education.

It isn't that she believes all kids should go to college, she says. It's just that her older, chemistry-loving child seems headed that way.

"We're self-employed," the Ballard mom explains. "We have a lot of mountains and valleys in our [photography] business. So paying for college is going to be difficult."

Like Porterfield, families all over the country are gulping at the cost of college today. What to do?

The main trick is to realize you don't have to shoulder the cost yourself. Help is available from the state, the federal government, colleges and even private scholarship sources. More than half of all students enrolled in U.S. colleges today use it.

Take LaCaille Lee, a University of Washington public-health major. "I have student loans, parent loans, scholarships and a part-time job," she says. "Without that, I wouldn't be here."

How to get aid To apply for federal or state financial aid, pick up a Free Application for Federal Student Aid (FAFSA) form — either online at www.fafsa.ed.gov or in person at your school counseling office, a public library, or any college or university. Because the form asks for information on your family's current income and assets, you can't submit it until you do your income taxes — or at least estimate them. The best time to submit it to the Department of Education is early January, because some college funds are handed out on a first-come basis. The Department of Education will accept your FAFSA for the 2005-06 school year any time between Jan. 1 and June 30, 2005. In return, it will send you (and the colleges you designate) a Student Aid Report, stating how much money your family will be expected to pay for college. Colleges subtract that figure from the cost of attending and award financial aid to make up the difference — typically a mix of free money, loans and a work-study job.

Last year alone, $105 billion worth of aid was awarded, according to the College Board. Some of the money went to low-income families in the form of grants and low-interest loans. (See accompanying list of what's available.) But much went to families like the Porterfields — not poor, but unable to foot the bill out-of-pocket.

"One of the biggest mistakes families make is to assume they're not eligible for financial aid," says Kay Lewis, director of financial aid at the UW. "If you think you need it, you should apply. Why not? Applying is free."

And you might be surprised.

That's just what happened to a family recently seen by Douglas Breithaupt, president of the nonprofit College Planning Network. The parents — both teachers — never imagined they'd qualify for aid. But facing the Herculean task of sending a fourth child to college, they applied. "Each kid was awarded an extensive aid package," Breithaupt reports. (Because of surprises like this one, many advisers recommend that students apply to "dream schools" as well as less expensive schools. With financial aid, they say, the students' families just might be able to swing it.)

According to Marla Skelley, manager of the nonprofit Center for Student Success, aid comes in three basic forms: "You have your free, your paybacks and your work."

Free money

How much free money — grants and scholarships — you receive may depend not just on your family income but also on how soon you send in your financial-aid forms (some aid goes quickly) — and on how much a school wants you.

How the financial pie slices Here's how the UW divvied up its financial-aid awards for the 2003-04 school year: Loans: 53 percent Grants: 34 percent Scholarships: 11 percent Work-study: 2 percent

Typically, merit scholarships go to students like Sam Ghods, a 2004 grad of Mercer Island High School who aims to integrate music, engineering and business studies at college. Ghods was offered a partial tuition waiver of $14,500 per year from the University of Southern California, along with a $2,500 scholarship from the Engineering Department, a $2,000 work-study spot and an invitation to apply for more free money.

Ghods, as you might expect, is not your typical student. Having studied violin since age 5, he composed a modern score for his high school's drama performance of "Peer Gynt" last year, then recorded himself and friends playing it. Just for fun.

At the same time, not every school is as flush as USC.

Private schools (Seattle University) and public schools with large endowments (UW) tend to dole out more. But even schools with relatively small endowments have some money to hand out. The Evergreen State College, for example, awards a partial tuition waiver to any incoming student with a 3.5 GPA.

Average cost of college For tuition and fees, room and board: 2003-04 Private four-year college: $26,854 per year Public four-year college: $10,636 per year And it isn't stopping there… Last year, tuition and fees at public colleges rose 14.1 percent, as cash-starved states wrestled with budget deficits. Source: The College Board

Paybacks, work

If you're middle class, your financial-aid package is apt to be light on free money (if you receive any at all) and laden with loans (see list of options). As a result, the average student graduates almost $19,000 in debt.

Thanks to low interest rates, loans are a pretty good deal right now — federal Stafford loans come with a rate of 2.87 percent for current college students and 3.42 for college freshmen.

Many aid packages also include a promise of a part-time job on or off campus, usually about 10 hours a week. And that's money you don't have to pay back.

Other options

If you still come up short of college cash, you may have to look for money outside your financial-aid package. Many families, for example, take out federal PLUS loans, which offer less-favorable terms than the Stafford loans (see chart). Or they dip into savings, or borrow on their home or retirement (see chart). Or they tell their kids to choose a less-expensive college.

But there's one more route that few people ever consider: Going back to the college and asking it to add more to the pot.

Appeals

You can always call the college's financial-aid officer or write a "special circumstances letter" explaining why you need more help. "Maybe your old car finally died as you were crossing the Aurora Bridge, or you have a pile of medical bills, or you just got laid off," says Breithaupt. "The college can often rework its figures."

Breithaupt cites an area family. They had a "decent income" of about $52,000 he says. But they also have enormous costs: one child already in college and a set of twins getting ready to go. When they explained their circumstances to Pacific Lutheran University, the school boosted its financial-aid package for the twin who applied there by $3,000.

"The college financial-aid officers are good guys," Breithaupt explains. "They want you to attend, but they need information to fight for you. It's up to you to help them. You can't just sit around and wait for it to happen."

Lyn Porterfield is not the kind to sit around and wait for anything to happen. Two years ago, she and her husband began stashing money away in a 529 college savings account. She's also broached the subject of college costs with her 14-year-old son.

"I told him we couldn't pay for his college ourselves," Porterfield recalls. "I said we'd supply our savings, but he'd need to come up with either a scholarship or financial aid. I let him know that it was going to be a group effort."

Copyright © 2004 The Seattle Times Company