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Now's the time for high school seniors (and their parents) to plan college financing

Attention parents of high school seniors: Imagine your pride and joy walking across a stage and picking up a college diploma with you cheering wildly in the stands.

Are you there? Can you hear the applause? Are you having a moment? Good. Hold that thought. You'll need it.

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Now is the time when high school seniors and parents are finalizing their choice of colleges -- and beginning the much-less-pleasant task of financing a college education.

That means government aid forms, college aid forms, loan applications and scholarship searches. Because if you're like most Americans, you'll need a little help making your teen's college dream a reality. The key is to start early.

"It's an overwhelming process. Don't let it intimidate you into procrastination," says Mark Kantrowitz, founder of FinAid. "The greatest asset you have is time. The sooner you start, the better off you'll be."

Costs continue to climb
Let's face it, most American families will not be able to pay for college on their own. In the 2003-2004 academic year, the average cost for tuition is $19,710 at a private university and $4,694 at a public university.

Even parents who started socking money away when their freshman-to-be was still in diapers may come up short. And they won't be alone. For the $105 billion in financial aid distributed in the 2002-2003 school year, 54 percent were loans.

"You can't beat yourself up over this. College is expensive and most people have to borrow," says Carolyn Shanley, senior writer and public relations manager for Nellie Mae. "It may not be the way everyone wants to go. It's reality."

Online brochures detailing the financial aid process are available from the National Association of Student Financial Aid Administrators and the College Board.

Fill out the form
The first big step to getting financial aid for college is filling out a Free Application for Federal Student Aid (FAFSA). This form must be filed if you want your son or daughter to be eligible for federal and state aid.

Come January, you and your teen will want to file a FAFSA as soon as possible. You can't file it before Jan. 1, but don't wait too long after that.

"A lot of federal aid is distributed on a first-come, first-serve basis, so the sooner you can get that in the better," Shanley says. "If you don't get yours in until August, all that's going to be left is loans."

Now is the time for parents and students to get their financial papers in order. The form asks parents for everything from federal tax forms and W-2 forms to current bank and mortgage statements to investment records. Students will need a copy of their own W-2 forms and federal tax forms as well as a list of the colleges that they'd like to attend.

A FAFSA application is available online at the U.S. Department of Education's Web site. Be sure to block out a few hours of time and fill in this form carefully. Have some aspirin handy.

"It's a pain in the neck to fill out," says Gary Goldberg, president of College, Financial & Tax Strategies, in St. Louis. "Most parents think because they've done income taxes they can whip out one of these. It's not that simple."

Check and double-check
Mistakes can be costly.

"Mistakes means delays. If it's wrong they'll send it back for you to fix and that costs you time and that can cost you money," Shanley says.

A common mistake parents make in filling out a FAFSA is misstating their assets.

"If you do that wrong it can cost you thousands in lost aid and you'll never know," Goldberg says.

Tips for filling out the FAFSA are available from FastWeb, FinAid, and Peterson's.

For more information about the FAFSA and the federal financial aid process, call 1-800-4-FED-AID (1-800-433-3243) / TDD 1-800-730-8913. Be sure to be on the lookout for financial aid nights hosted by local high schools and colleges.

Many private and some public universities have additional aid forms that must be filled out. Again, turn in these forms as soon as possible.

About four to six weeks after submitting a FAFSA, you'll receive a Student Aid Report (SAR). This report summarizes the information submitted on the FAFSA and lists your expected family contribution, which is the amount of money the government expects your family to pay in college education costs. Brace yourself.

Sticker shock
"When parents look at expected family contribution, they're going to be shocked," Kantrowitz says.

Here's why: Federal financial aid calculations may expect parents to contribute as much as 6 percent of their savings and anywhere from 22 percent to 47 percent of their available income toward college costs. Gulp.

Available income is determined by taking parents' 2002 taxed and untaxed income and subtracting a number of allowances including federal taxes, a percentage of state and local taxes, number of parents working and number of kids in college.

The FinAid site boasts a calculator that will help you estimate your expected family contribution.

Colleges and universities will try to make up the difference between the cost of attending their school and a family's expected contribution with a financial aid package.

Study financial aid award letters carefully. One school may meet all your financial aid needs through loans. Another college may only be able to meet part of your needs, but it can do so with grants. A calculator for comparing award letters can be found on the Nellie Mae site.

"Some schools dole out money left and right and some schools are very, very tight," Goldberg says.

Don't necessarily knock your kid's dream college off the list because of its eye-popping sticker price. Many private schools have deep pockets when it comes to financial aid.

"The reality is the higher the cost of college, the more financial aid that's available," says Jack Joyce, manager for communications and training services at the College Board.

Experts urge families to choose a college based on a teen's academic interests and career plans, as well as a college's size and location. Look at costs last.

"Let the kid choose a school by academics and then let's figure out how to pay for it," Goldberg says. "You never know -- a more expensive school may give you a better financial aid package."

So for now, your teen needs to narrow down his or her college choices and start applying for admissions. You and your teen should also be doing a countdown to January and that all-important FAFSA filing. Don't forget to beat the bushes for sources of private aid, such as scholarships and grants.

Scouring for scholarships
Many scholarships can be tracked down and applied for online. Start by visiting individual college Web sites and be sure to search for other scholarship sources on sites such as FastWeb and the College Board. Avoid sites that charge you to search for scholarships.

"The rule of thumb is if you have to pay money to get money it's probably a scam or certainly not in your best interest," Kantrowitz says.

Don't limit your scholarship search to cyberspace. Pore through scholarship books. Visit the library. Talk to high school guidance counselors. Don't overlook local sources of scholarships and aid, such as churches and civic organizations and local businesses.

"Local awards don't appear in any database or in any book," Kantrowitz says. "There are quite a few small local awards that you can find out about on bulletin boards outside a guidance counselor's office."

While local awards may come in smaller dollar amounts, your teen has a better chance of landing one. It's worth a shot.

"How else can you spend an hour writing an essay and get a couple hundred dollars?" Kantrowitz says.

It can pay off. Shanley says her younger brother's all-out scholarship search led him to apply for a 4-H scholarship, even though he never had a pet in his life. He ended up winning a $700 award.

"You just never know," Shanley says. "You want to exhaust all resources."

If amid all this searching and filing and number crunching you start to waver, take a deep breath and think of the day when your very own college graduate will strut across that stage ready to take on the world.

"Think of it as an investment. An education is one of the best investments you can make," Kantrowitz says. "I don't know of any parent who wouldn't be proud to see their child graduate college."

-- Updated: Oct. 26, 2001




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