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Aid for college

David Flaum (The Memphis Commercial Appeal) -- If you're headed off to college next year and asked the school for financial help, you've probably gotten an aid offer or, at least, it's on its way to you.

Many folks may find the aid package combined with family resources won't completely cover the costs of college.

Don't give up, advisers said. You can find ways to fill the gap.

In part, what you do depends on whether you face a cash-flow problem or an overall money shortage.

If, over the course of the year, you can come up with the funds you need to pay the bills but won't have it all up front, you should find out if the school has a monthly payment plan.

Most schools send out bills in August and January, each for 50 percent of costs, said William Hastings, president and chief executive officer of Academic Management Services in Swansea, Mass.

Say your school wants $4,000 in August. If the college has a plan, you may be able to stretch your payments over 10 to 12 months, said Hastings, whose company provides such plans, financial counseling and loans to students and their families.

At $400 a month, you may be able to handle those costs out of current income, he said.

"It reduces the amount of borrowing you may have to do," Hastings said. The cost of your education goes down and you, or your parents, don't have loans hanging over your heads after graduation, he said.

If a money shortage is your problem, here are some other suggestions for raising cash:

Scholarships

Start or renew your search, said Katie Gardiner Cole, a certified financial planner with American Express Financial Advisors in Memphis.

Ask the financial aid officer for a list of scholarships that are available from the college, she said. Also, parents and grandparents may ask at work to see what scholarships their employers may provide, Cole said.

You can also use several free Internet services to look for possible aid, said Bob Murray, manager of corporate communications for USA Funds, an education loan guarantee company in Indianapolis.

Deadlines for many scholarships have passed for this year, Murray said. Keep them in mind for next year, though, he said.

Work

A summer job "should be part of any student's plan for paying for college," Murray said.

You may also consider working during the school year, depending on where you are going to school and your academic load, Cole said.

"Working and going to school at the same time is hard to do. You should put school first," she said.

But, if a job will make the difference between attending college and not going, you will have to make that adjustment in your school schedule, Murray said.

PLUS Loans

These are loans to parents, not students, Murray said.

Unlike student loans, you have to start paying back PLUS loans soon after you take them out. They are repaid over a 10-year period, he said.

You may borrow up to the difference between the cost of your student attending the college and the amount in the financial aid package, Hastings said. The interest rate on the loans is 8.99 percent, he said. But because rates in the economy have dropped in the last few months, PLUS loan rates may be lowered in July when rates are set for the coming school year, he said.

Parents must qualify for the loans, but the review process isn't as detailed as the credit check for a mortgage or credit card, Hastings said. About 75 percent of people who apply will qualify, he said.

Other Borrowing

If you can't qualify for a PLUS loan, chances are you won't be able to get other credit either, Hastings said.

You may need to find someone, such as a grandparent, to co-sign a loan for you, he said.

People who have home equity credit lines but haven't used them could tap into that source of funds for children's college costs, he said. Be careful -- if you can't pay that loan back you could lose your home, Murray said.

As a last resort, you may want to consider taking a loan from your 401(k) plan at work, but you should do that only if you have made sure first that you have enough in that plan and other assets to meet your retirement needs, Cole said. And you should have a plan for repaying that loan and bringing your account back up to the pre-loan value, she said.

Appeal to Financial Aid Office

You may ask the financial aid officer to review your situation to see if he or she can increase your aid package if you believe the school made a mistake or there is a change in your personal circumstances since you filed the application.

For example, if someone in the family lost a job or you have a financial problem, you should tell the financial aid officer about it, Hastings said.

Keep in mind that many colleges have exhausted their aid budgets and may not be able to add to your package at this point, Murray said.

Change Your Plans

If you plan to go to college in the city where you live, consider living at home rather than on campus, Hastings said.

If all else fails, you may need to go to a school that costs less than the college you planned to attend. That may mean going to a community college for a couple of years, then transferring to a college in your price bracket, Hastings said.

(c) 2001 The Memphis Commercial Appeal

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