100 Tips for 2011 » 10 college tuition tips in 2011
With 529 plans fluctuating, financial-aid budgets getting slashed and tuition rising at an alarming rate, the landscape of college financing is changing fast. Fortunately, you still have options. Here are the best college finance tips for 2011.
Apply for scholarships and loans early
While private scholarships have their own specific application deadline, students can apply for federal financial aid starting Jan. 1.
"Funds are limited and you don't have to wait to get your acceptance (to a school) before starting the (scholarship) application process. Apply as early as you can," says David Feitz, executive director for the Utah Higher Education Assistant Authority in Salt Lake City.
Even if a student believes that he or she doesn't qualify for federal scholarships and grants, Feitz advises them to fill out the Free Application for Federal Student Aid, or FAFSA.
"Many universities use that FAFSA as a basis for institutional aid," says Feitz.
Save in the right name
Where you save can count just as much as how much you save. To make sure that your college savings aren't detracting from your family's financial aid package, Joe Hurley, founder of Savingforcollege.com, recommends that families place their assets in accounts held in the parents' names.
"The first dollar of (assets held in the student's name) will impact a family's expected contribution," says Hurley. "That can lower the financial aid package."
Savingforcollege.com reports that student assets -- any cash stored in a checking or savings account, business venture, real estate or investment in the child's name -- are assessed at a rate of 20 percent. That means that for every dollar the student saves, the federal government will subtract 20 cents of every dollar in the student's financial aid package. At 2.6 percent to 5.6 percent, the assessment rate for parental assets is much less stringent.
Reconsider public service professions
Students frequently shy away from public service fields like social work, public defense and law enforcement due to the sometimes crushing educational debt. Thanks to legislation passed in early 2010, those eyeing public service professions have more financial incentive.
According to the U.S. Department of Education, those in public service professions who work for the federal government or nonprofit entities are required to make 10 years' of consecutive payments on federal student loans. After that, they are eligible to have their remaining federal student-loan debt forgiven. Borrowers also can apply for the federal, income-based repayment plan, which caps monthly payments at 15 percent of discretionary income, defined as earnings greater than 150 percent of the poverty line currently set at $16,245 per year for a household of one. Borrowers who earn less than $16,245 will have a monthly payment set at zero, but will still have those free payments count toward loan forgiveness.
Financial aid officers will look at how much savings and other assets you have, but they won't look at how much unsecured debt you've accumulated. To make sure that you get the maximum financial aid possible, Kalman Chany, author of "Paying for College Without Going Broke," advises parents to first stash money in places that aren't part of the Free Application for Federal Student Aid.