Q. Our daughter's college fund has plummeted. She's a senior with an eye on colleges out of state. We can't afford them, and she's putting on the "pout." How can I convince her she'll do just fine if she goes to a lower-cost local option?
A. Tell her she's not the only kid in this pickle. In a new survey, 50 percent of families say they're limiting their child's college choices to less-expensive options, in response to the economic downturn. The survey was conducted by ApplyWise, a college-admissions program; and Next Step Magazine, a college-planning publication and website for high-school students.
The class of 2009 will send the largest number of graduates to college in American history. "We're receiving many e-mails from students whose families have fallen on hard times and need outside help," Next Step Magazine editor and publisher Laura Hammond says.
The shaky economy is prompting a closer look at state institutions that charge residents less for tuition. "Most state college systems offer several different environments," Hammond says. "Take your daughter to visit in-state schools with programs comparable to schools on her list."
While it's smart to look for back-ups, don't rule out colleges your daughter has targeted. Most have a "list price" that decreases after applying for financial aid. While competition for this aid is stiff, she shouldn't abandon her dream school without exploring tuition discounts, "free money" (grants and scholarships) and loans, Hammond says.
• Your daughter may be eligible for tuition discounts, based on her SAT or ACT score, high-school GPA or class rank. "These are sometimes awarded automatically, based on the application, but it never hurts to ask what discounts you could be eligible for," Hammond says.
• Grants are free money awarded by your college, or state or federal government, based on information on your Free Application for Federal Student Aid, or your interests or merit, Hammond says.
• "Next, check out credentials she'll need to be automatically qualified for merit scholarships," Hammond says. "She might qualify for a full ride, due solely to her high-school success or achievement in a particular area."
• Search for private scholarships. "Some go unused, because no one applies," Hammond suggests. "Check out local awards. National scholarships may offer more money, but you're competing with more people." Search at nextstepmag.com.
• There are two categories of loans: federal and private. You apply for federal money, such as the Stafford and Perkins loans, by filling out the FAFSA as soon after Jan. 1 as possible. "Your daughter's college will let you know what student loans she's been awarded. Respond to that letter — whether or not you want the loans," Hammond says.
PLUS loans are federal loans taken out by parents. You can borrow up to the full amount of your child's education, including tuition, travel, books, fees and so on. Learn how to apply at ed.gov/finaid.
Private loans come from individual banks or loan companies. "Keep these to a minimum," Hammond says. "Higher interest rates and fewer repayment options can saddle a graduate with heavy debt."
• Explore "work-study" aid, awarded as a result of your daughter's FAFSA information. This allows her to apply for on-campus jobs for work-study students. With work-study, she receives the money in a regular paycheck, and it's up to her to put it toward college fees.
College graduates earn an average of $800,000 more during their professional years than noncollege graduates, says Katherine Cohen, president of ApplyWise.com. "So college is actually one of the best financial investments a family can make." In these times, it pays to avoid a pile of debt upon graduation.
Leanna Landsmann's column appears every other Monday. Do you have a question about your child's education? E-mail Leanna@aplusadvice.com.
