Trying to Pay for College? You Don't Have to Go Begging

updated 11/12/1984 AT 01:00 AM EST

originally published 11/12/1984 AT 01:00 AM EST

As sure as finals follow midterms, the annual agony of the high school senior's getting into college is followed by the problem of how the family pays the tuition. Robert Leider, 58, a career Army officer who retired in 1975, faced the problem during his daughter Anna's senior year in high school. Leider got so caught up in research that, even after he found her a $10,000 scholarship in 1976, he couldn't stop. In 1977 he published his first edition of Don't Miss Out: The Ambitious Student's Guide to Financial Aid (Octameron Press, $3), which he updates annually. With college costs expected to approach $54 billion nationally in 1985-86—an average of $4,881 a year for tuition, room and board at state schools, $9,022 a year at private schools—students need all the help they can get. Leider told correspondent Karen Feld where the green is longest, and where it is deceptively tinged with red.

What's the biggest myth about paying for college?

Most people think scholarships put money in their pockets. Get rid of that thought. Let's say College X has looked at your family assets and decided you can pay $5,000 a year. Then you find a $1,000 scholarship. Often, a college will either use that $1,000 to replace an equal amount of aid it had planned to give you, freeing that aid for another student, or it will add the scholarship to your resources and say, in effect, now you can pay $6,000. Scholarships help pay the bill, but they don't reduce your share of that bill.

Aren't there a wealth of corporate and foundation grants to be harvested?

That's another misunderstood point. Many big corporations do offer aid, but usually just to the children of their employees. A few like Kodak and RCA give awards, which are administered by the college. You can't apply for these directly. Foundations usually help students only at the graduate level. Money for undergraduates is often restricted to those living in narrowly specified geographic areas—such as the scholarships that Avon offers only in areas like Morton Grove, Ill. and Springdale, Ohio, where the company has plants. If you're willing to invest the time, it might be worth going to the library and looking through a book called Foundation Grants to Individuals that lists a limited number of undergraduate awards.

What about special scholarships for people of various backgrounds or academic interests?

Most are very small and eligibility does not guarantee you will get one. The odds are stacked against the student. The four biggest sources of aid are Uncle Sam, colleges, states and employers. People should head for the big platters instead of trying to search for crumbs.

Aren't minority students in an advantageous position?

No. In fact minority students are in deep trouble. The Reagan Administration has tried to reduce overall student aid every year. While Congress hasn't gone along, it has kept aid at about the same level for the last four years, while tuitions have gone up as much as 10 percent a year. High-priced colleges can make up the difference for a few low-income minority students a year, but only a few. As a result, recruitment of minority students at expensive colleges has fallen off. The outcome is a disproportionate number of minority youngsters in community colleges, two-year colleges or no college at all.

Where can low-income students turn for financial help?

Undergraduate grants offered on a need basis, called Pell Grants, are Uncle Sam's biggest gift program. Congress has upped the kitty to over $3 billion—in individual grants of $200-$2,100—that will be given out in 1985-86. A family of four with an income under $28,000 should qualify.

When it comes to long-term planning for college, why do you advise against putting trusts in a child's name?

You hear a lot about things like Clifford trusts, which earn dividends in the child's name. Unless you earn more than $150,000 a year, what you save in taxes with a plan in your child's name you can lose when you apply for financial aid. In the formulas the colleges use, students are expected to contribute 35 percent of any money in their name, while parents are only expected to kick in about 5 percent of their assets. The more the student has, the more he will contribute and the less likely the family will be to get aid.

What's happening with loans?

Guaranteed Student Loans, which are offered by banks and some states, are available now at 8 percent interest. Colleges offer federally funded National Direct Student Loans at 5 percent. These are especially attractive because no interest accrues until six months after the student graduates. Then the student has five to 10 years to repay. One increasingly popular option lets parents pay tuition four years in advance. This protects them against yearly increases. Other colleges are beginning to offer adjustable-rate loans. These are like adjustable mortgages except that, instead of the amount of the payments varying, the length of the loan varies. For instance, your monthly payment might be fixed at $150, but the number of months is flexible. It's an attractive option because the interest rates can be as low as 9 percent, as at the University of Pennsylvania.

Are there any new ways to foot the bill?

Yes. President Reagan has scared the colleges so badly by threatening to cut their funds that he's forced them to work harder and try innovative approaches. For example, Union College in Lincoln, Nebr. now gives a "guaranteed" degree. If you major in education but then can't find a job as a teacher, after two years the college will let you come back and try another major, tuition free. Unity College in Unity, Maine will consider barter. Does your daddy have a fuel company? He can help the college fill the oil tank. In exchange, the college will adjust the child's tuition accordingly.

How can students maximize their chances of getting aid?

Apply early. Financial aid is often given on a first-come, first-served basis. A student entering college next fall should apply for aid early in January. You have to wait until the first of the year because application forms ask for the parents' total '84 income. Don't wait until you have all your W-2s. If you have good records and you plan ahead, you can usually make pretty accurate estimates.

How can a student find the school most likely to be generous?

keep in mind that it's a buyer's market. With the exception of the top schools, most colleges are jostling each other for good students. If the tuition check is good and the body is warm, you're in. To take advantage, apply to schools where you would stand in the upper 25 percent of the freshman class. Those schools will view you as a valuable acquisition, and you'll probably get better aid than you would at a college where you just crept over the admissions threshold.

If you don't like the package you're offered, what can you do?

The school will negotiate under certain conditions—if your parents went there, if you're from a geographic area it wants, if you have special talents, for example. Always apply to two schools in each of three categories: hard to get into, average and easy to get into. No school likes to lose a student to a direct competitor. You can sometimes play them off against each other and get a better deal. Aid doesn't always go to those who need it most, but to those who know how to get it.

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