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What are my best options for funding my high school graduate's college costs next year?

If you have a student headed to college in the fall of 2005 and are not in a position to pay for it through your normal income or college savings, there are several financing options open to you.

Getting Started

First, visit your student's high school guidance counselor. Counselors usually have a wealth of information at their fingertips about scholarships, grants, work-study options and other programs available to help pay for college.

Secondly, make sure you meet the deadline for filing the Free Application for Federal Student Aid (FAFSA) form. Many scholarships, grants, and other funding programs - including private ones - require an FAFSA. In Tennessee, your FAFSA must be processed by May 1, 2005, to meet the deadline for awards for the 2005-2006 school year (electronic filing takes a few days to process; U.S. mail applications take up to about 6 weeks to process). The priority deadline for filing the FAFSA for federal aid is May 15. Click here to file your application. Tip: it will be easier to fill out the FAFSA if you have filled out your federal tax forms.

Scholarships

Start with the Admissions office at the college your student will attend. While many of the application deadlines have passed for the 2005-2006 school year, you still have time to apply with a few of the programs if you act quickly. Your guidance counselor should be very familiar with these procedures and of great assistance to you in this process.

In Tennessee, there are a couple of state-funded scholarship programs that are still accepting applications. Learn about those at www.state.tn.us/tsac/grants.htm.

And don't forget about Tennessee Education Lottery Scholarships. The most common lottery scholarship is the Tennessee HOPE scholarship, which awards up to $3,000 for an approved four-year school and up to $1,500 for an approved two-year school. Visit http://www.tnscholardollars.com for more information.

Grants

The two key federal grants (which don't require repayment) are the Federal Pell Grant and the Federal Supplemental Education Opportunity Grant (FSEOG)/ These range from about $100 to $4,000 each and are awarded based on financial need. For more information, go to http://studentaid.ed.gov/PORTALSWebApp/students/english/index.jsp

Family (including your student/child)

Family members, especially grandparents, can be a valuable resource if you need help paying for college tuition. Grandparents typically see college funding as an investment that will repay itself many times over. After all, these are their grandbabies. Many parents today also expect their children to work during the summer to help pay for their own education.

Private Loans

With interest rates as low as they have been for the past two years, the home equity line of credit has become an increasingly popular way to pay college costs. This is a variable rate loan, which means the rate moves up and down with the prime rate. While the prime has been increasing with the improved economy, a home equity line of credit still offers a lower rate than personal loans. The home equity line provides greater flexibility and allows for interest-only payments on a monthly basis.

Personal loans that vary based upon market conditions with regard to interest rate are another key private loan option for funding college. Personal loans other than home equity lines of credit will typically require collateral and are normally more stringent in their repayment requirements than home equity lines of credit.

Government loans

Federal Stafford loans are low-interest loans made to undergraduate and graduate students attending accredited schools at least half time. Depending on the loan, it can be funded by the federal government or a bank. To apply, the student must file an FAFSA, regardless of the funding source.

Federal PLUS loans are made to parents and allow you to borrow money for each undergraduate student enrolled in school at least half time. PLUS loans carry the highest interest rate of the federal loan programs, and a credit check is required.

A Federal Perkins Loan is a low-interest (5 percent) loan for undergraduate or graduate students with "exceptional" financial need.

For more on these loans, visit www.ed.gov/offices/OSFAP/Students/student.html

Final Tips

Watch out for scams. You can find free access to virtually all the information you need on scholarships, grants and loans. You can get the information free, so why pay?

If you are reading this article and still have children who haven't reached their senior year of high school, go ahead and start saving for your kids' education now. It's never too early, and even if you start late, it's better than not starting at all.

Visit http://www.finaid.org and www.staffordloan.com/resources/links.shtml. These are two of the best resources we have found.

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