College Education Concerns in the 21st Century
(c) M. Ryder

Back when jobs were plentiful, investments were growing nicely, and borrowing was easy -- the good old days of 2007 and 2008 -- students and parents could generally cobble together the $18,000 or so cost of a year at a public university using some variation of the oft-recommended "thirds" strategy:

One third from savings, one third from debt, and one third (about $500 a month) out of the family paychecks.

But how can they scrape together tuition money now that the bear market has wiped out savings, banks are scared to make loans, and layoffs have eliminated millions of high-paying jobs?

Simple:

When there are fewer fish in the ocean, fishermen have to work harder and cast their nets wider. There are many new opportunities to get free cash for college, or low-cost loans (as you'll see in the following article). The saviors are the federal government, some increasingly generous colleges, start-ups, and new sources of unexpected generosity. Rapper will.i.am, for example, made headlines this year when he gave away four full scholarships on The Oprah Winfrey Show.

"There are some hopeful things happening," says Kal Chany, author of Paying for College without Going Broke, 2009 Edition (College Admissions Guides).

"The path may be more difficult. But you can still get to the final destination" -- a college degree.

Helping hand.

You can indeed, says Karisha Sutton, a B-plus high school senior from Columbus, Ohio, whose dad's disability prevents him from working and whose mom works as a home health aide. Sutton was about to give up on going straight to college because her family couldn't afford to send her to a nearby state university. But then she heard about the University of Toledo's offer of free tuition to low-income students from several areas of Ohio. Newly hopeful, she filed several last-minute scholarship applications. A thick acceptance letter from Toledo and a few private scholarships have turned her into an excited student and aspiring doctor. Now, she tells her friends who are feeling discouraged: "Don't just give up!"

But raising the cash you need to pay for college isn't getting easier.

Tuition at the average public university has more than quadrupled in the past 20 years, rising to nearly $7,000 a year. Add in dorms, books, travel, etc., and the sticker price for a year at a local public college now exceeds $18,000. A year at some "public Ivies," such as the University of California-Berkeley, can cost more than $28,000. And the average price of a year at a private college exceeds $37,000.

In the past, scholarship money made it possible for about half of all public university students to cover most of their tuition with free money. And three quarters of private school students got scholarships that knocked, on average, about $10,000 a year off their bills.

But some aid programs have been hit by budget cuts.

Students who need help to pay their tuition might want to look beyond traditional sources of college cash. Here's our best advice on where to look:

Go where the money is.

The federal government has dramatically boosted aid for students. For the 2009 and 2010 tax years, anyone whose adjusted gross income is less than $80,000 ($160,000 for a couple) a year is eligible to get $2,500 back from the IRS for the first $4,000 spent on tuition and fees -- for the taxpayer as such, or for each of his or her kids.

The Obama administration plans to raise the Pell grant, which is the biggest source of free money for low-income students (generally, students from families earning less than $50,000 a year). Obama is proposing to raise the maximum grant for the fall of 2010 by $200, to $5,550. To qualify for the Pell and most other federal aid programs, students must fill out the Free Application for Federal Student Aid, or FAFSA, each year, preferably as early in the year as possible.

The federal government has also greatly improved GI Bill benefits, so that those who serve their country for a few years can get much of their college costs covered.

While public schools are raising their prices, many private colleges are cutting their net prices. Boston College, for example, asked all departments to cut their budgets, and it's funneling millions in savings into financial aid. Harvard, Stanford, Duke, Williams, and other elite colleges have pledged to provide free, or nearly free, rides to students from low-income households. Many private colleges were unusually generous this year, says Al Hoffman, a private counselor in New London, Conn. "I saw many wait-listed students get great awards this year," he said. In the past, they often had to pay full price.

"Next year, I believe, will be even better, as the price wars go into full warlike mode," Hoffman says. He expects schools to use scholarships to lower the net cost of a college education and make sure every classroom seat is filled. The way to take advantage of the coming price wars, Hoffman advises: Apply to lots of schools, including a few public low-cost colleges, a few "reach" or dream schools, and several private colleges with student bodies whose average grades and test scores are at least slightly below yours. Students can check out their target colleges' admission statistics at usnews.com's premium site or free at the Department of Education's College Navigator site (http://nces.ed.gov/collegenavigator/).

Students can also exploit other selling points to pry more scholarship money out of schools. Although Division III schools don't award athletic scholarships, they may provide other aid to attract well-rounded students. Many liberal arts colleges have recently had trouble attracting male applicants, so they might be willing to go a little further for the ones they admit. Many male-dominated engineering schools, on the other hand, might be eager to attract females. And colleges typically want a diverse student body, which may make them more generous to students from distant states.

A growing number of companies are using college aid as a marketing tool. BabyMint, LittleGrad, Futuretrust, Upromise, and other rebate websites will send cash to a college savings account for shoppers who click through their sites to partner retailers. And a marketing company, SAGE Scholars, has persuaded more than 200 private colleges to guarantee "Tuition Rewards" scholarships to students from families who invest or shop with SAGE's business partners.

A time to be humble. Today's harsh financial reality is forcing more students to attend cheaper schools. In a mid-2009 survey, nearly three quarters of high school counselors said they'd seen an increase in the number of students forgoing their dream colleges. And 60 percent reported that some of their students were choosing lower-cost public schools (often two-year community colleges) over pricier privates.

This development isn't necessarily detrimental to students, since a college's price isn't always an indicator of quality. Many low-cost public colleges do a better job of shepherding students through to graduation, for example, than do expensive private schools. Check out which low-cost schools have high graduation rates at usnews.com's premium site or free at the government's College Navigator .

And if a college simply isn't providing enough in grants and scholarships to allow the student to attend, it pays to write a letter asking for a "professional judgment review" and an increase in aid. College aid officials say students who request extra help (and can document their need for it) are far more likely to get aid these days.

Pat Watkins, director of financial aid at Eckerd College in St. Petersburg, Fla., says she's able to give out more money to parents who write and document the loss of a job or a pay cut. Also persuasive are expenses that aren't accounted for by the FAFSA, such as medical bills or support of other family members. "Don't be ashamed," Watkins says; there's plenty of company. Don't delay, either, she adds -- some of the scholarship money is handed out first come, first served.

Work harder.

Stiffer competition means students have to work harder and longer to gather the money they need.

There's only enough private scholarship money to help out about 7 percent of all college students. Applications to the Florida-based George Snow Scholarship Fund were up 24 percent this year, says Tim Snow, who runs the program. Judges had to use extremely tough criteria to winnow out applicants, penalizing misspellings, anything less than a perfect rating from interviewers, failure to dress appropriately, and even being less than polite to the office secretaries.

Previously, students could line up funding for their freshman year and expect automatic renewals. Now they are finding that the scholarship search continues throughout their college careers. After Googling for scholarships and filling out essays for much of her high school senior year, Shenise McKnight of Sacramento, Calif., found herself spending much of her free time as a freshman at Howard University doing the same thing. Looking back, she wishes she had worked harder and cast her own college and scholarship nets wider -- "I'm beating myself up," she said, for missing the cutoff for a Howard scholarship for freshman year by just 10 SAT points. Now she's pinning her hopes on a financial aid review that might win her the scholarship for her sophomore year. The way to pay for college, McKnight has discovered, is to "prepare ahead of time and open your eyes" to the broadest possible college and financial opportunities.

Available at Amazon.com:

Paying for College without Going Broke, 2009 Edition (College Admissions Guides)

The College Solution: A Guide for Everyone Looking for the Right School at the Right Price

The Best 371 Colleges, 2010 Edition (College Admissions Guides)

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(c) 2009 U.S. News & World Report