Still Time to Find Money for College

If you're in the process of packing up your son or daughter for college and worried about how you're going to pay for it, here's good news: There are still sources of funding available (USA Today Aug. 11).

The bad news: College prices continue to rise. The average cost of attending a public four-year university for the 2008-2009 school year was $6,585 - up 6.4% from the previous year. And if you're attending a private school, expect an average price tag of $25,143 (collegeboard.com). If you multiply those numbers by four years and figure in inflation, you're laying a lot of money on the table.

Consider these options for financial assistance:

• Federal student loans. This should be the first place you look for loans. To apply for a federal student loan for the 2009-2010 school year, you must submit a federal application for financial aid (FAFSA) by June 30, 2010 at midnight. (Note: the deadlines for your state or college may be different from the federal deadline - check fafsa.ed.gov/before003a.htm for details.) You can receive grants that do not have to be repaid, work-study, or Stafford loans - either subsidized or unsubsidized, or both. Full-time dependent students can receive up to $5,500 in loans their first year, and the amount increases for second- and third-year students. You can find the FAFSA form, as well as more information, at fafsa.ed.gov.
• PLUS loans. Parent PLUS loans are federally guaranteed loans carrying a fixed rate of 8.5% - a little higher rate than some private loans, but you won't have to worry about the interest rate rising. Securing a PLUS loan does not require a high credit score; however, a foreclosure, bankruptcy, or debt more than 90 days overdue could disqualify you.
• Private loans. Although many lenders have tightened their standards, private loans are still available for students--after you've exhausted all other sources of aid. Credit unions generally offer loans at lower rates than for-profit lenders--ask your credit union loan professionals for more information. Further, a group called Credit Union Student Choice works with more than 80 credit unions to make private loans available for college students. Visit studentchoice.org for details and to view a list of participating credit unions and colleges.
• Financial aid. Although most financial aid packages are awarded in the spring, if you have suffered any financial setbacks - such as a job lay-off - you may be able to appeal to the university's financial aid office. Most colleges can take the current year's income and assets into consideration.

Your university's financial aid office also may let you set up an extended-payment plan. With this option, you can pay your tuition bill in monthly installments, instead of one large payment. To set up a plan, you may have to pay a fee of $50 to $100.