There's still time to seek help on tuition if finances come up short


Your Money

August 08, 2004|By EILEEN AMBROSE

COLLEGE TUITION bills for the fall semester are due this month, and for some families it will be panic time: They won't have the money.

It's not unusual, some schools say, to hear from families in this predicament.

"There are all kinds of reasons," said Frank Valines, associate director of financial aid at the University of Maryland, College Park. "They range from `I didn't realize how much tuition was going to be. I wasn't prepared to pay that much,' to `We just had a financial setback and can't pay the bill.' Or `We're getting a divorce and dad's not going to pay or mom's not going to pay.' "

Resources are more limited now, but it's not too late to get help. Students who haven't applied for financial aid already, for example, can do so now. Or, if a recent event has caused a family's income to drop, schools will revisit a student's aid.

Aid officials advise families to contact schools as soon as they realize they will come up short. Last-minute assistance will differ among colleges, but here are some options:

Special circumstances

A job loss, a parent's death or medical emergency can deplete cash reserves that families had counted on for college.

"We try to save some funds" just for such unexpected hardships, said Ron Shunk, financial aid director at Hood College in Frederick. "We try to be sympathetic."

Not all cases generate sympathy or funds. Forgetting to save money for college or having a lousy quarter in the stock market likely won't loosen school purse strings, Shunk said.

Families with a hardship should contact the school and request a review of aid. They typically must send a letter explaining the hardship and its impact on finances, while also providing documentation, such as a copy of a layoff notice or a death certificate, experts said.

Tuition payment plan

Many schools allow families to pay tuition on a monthly basis, stretching payments over, say, eight to 10 months. The payments are interest-free, but the plans charge a yearly application fee of $35 to $75.

Plans also often provide insurance that will pay a tuition bill for the year if a parent dies or becomes disabled, Shunk said.

Still find it tough to meet monthly payments? Review household expenses, looking for items to cut.

"Getting rid of cable every month can give an extra $75 or $100 in your budget that you can use to help pay for school," said Sharon Hassan, financial aid director at Goucher College in Towson.

Check with your tax adviser, too, about reducing taxes withheld from your paycheck, Hassan said. You won't get a big tax refund, but the extra take-home pay will help.


Most scholarships for the coming academic year were awarded many months ago. The pickings are slim now, but there are still scholarships with deadlines every month, said Mark Kantrowitz, publisher of FinAid, an online source for financial aid information. Search for potential scholarships at, Kantrowitz suggested.

This homework also can give students a jump on scholarships for next year, he said.

Government loans

Students can apply any time of the year for federal Stafford loans, which don't have to be repaid until months after graduation. If students meet the needs test, Uncle Sam will pay the interest on the loan while they're in school.

Students whose family income is too high can still borrow under the program, but they will have to pay their own interest while in school. They can delay interest payments while enrolled by adding the expense to the loan's principal.

Stafford loans have borrowing caps, but basically dependent students can borrow up to $2,625 as freshmen, $3,500 as sophomores and $5,500 a year as juniors and seniors.

If they are independent, such as 24 or older, they can borrow up to an additional $4,000 for each of the first two years of school and $5,000 for each remaining year. The interest is not paid by the government.

The interest rate on Stafford loans is adjusted yearly and is at an all-time low of 2.77 percent now.

For parents, there is the federal Parent Loan for Undergraduate Students (PLUS). "It's the next best option," Shunk said.

Parents can borrow the cost of attending school, minus any financial aid received. PLUS loans are available regardless of income, although parents must pass a credit check. If the parents can't get a PLUS loan, students can borrow more under the Stafford loan, like independent students, Shunk said.

The interest rate on PLUS loans, now at 4.17 percent, is adjusted annually. Repayment begins shortly after parents receive the final disbursement for the school year.

Home equity

With rising home values and interest rates still low, families might opt to tap the equity in their houses.

A home equity loan enables parents to borrow a lump sum, usually at a fixed interest rate, and repay it in equal monthly installments over a specific period, such as 15 years. For borrowers with good credit, the rate is now around 7 percent.

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