7 Ways to Dig Up More Money for College

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7 Ways to Dig Up More Money for College

FOR MANY HIGH SCHOOL seniors (and their parents), the moment of truth is about to arrive. In the next several weeks, they'll not only find out which colleges they were accepted to, but also how much money those schools are willing to give them.


Unfortunately, many students will be disappointed -- at least when it comes to their financial aid package. Demand for financial aid has skyrocketed for the 2009-10 academic year and schools can't afford to extend more aid than they could in the past, says Rod Bugarin, a financial aid and admissions counselor at New York-based IvyWise, an independent college-counseling company. (Bugarin is a former financial aid officer at Brown University and Columbia University.)

As a result, many families will find themselves falling significantly short when it comes to affording tuition (and room and board). Here's how you can start digging up some extra cash for your kid's college tab:

Appeal for More
Feel as if you've been shortchanged by the school's financial aid office? Call them to appeal for more money. As students start rejecting schools' admission offers, more money opens up that you could have a shot at.

This method is most effective if a parent has undergone a financial hardship, such as the loss of a job or unexpected medical bills, since they initially filed their financial aid forms. Be prepared to present your 2009 tax returns and a list of monthly income and expenses, says Bugarin. In addition, point out nondiscretionary expenses that may impact a financial aid officer’s decision, like tax bills or certain types of debt.

Ask the school to match (or beat) a better offer
Sometimes one school can be extremely generous with their aid offers, while another, quite similar school, can be...well, stingy.

If this happens to you, tell the financial aid office at the college that a school of similar rank has offered your son or daughter more aid. The financial aid officer may match the package or increase it, says Bugarin. The worst-case scenario: The financial aid office sticks to its initial offer.

Parents: Apply for a PLUS Loan
Parents might want to consider a Parent Loan for Undergraduate Students (PLUS), which covers all the costs of tuition and board, minus any grant money the student receives. These loans tend to carry favorable interest rates and repayment terms compared with private loans, says Kalman Chany, president of New York-based Campus Consultants, which provides financial aid assistance to college students and their families.

PLUS loans can be secured through the federal government 's Direct Loan Program (assuming the school participates in this program) or through a bank. Maximum fixed interest rates on these loans are 7.9% and 8.5%, respectively.

Apply for an Unsubsidized Stafford Loan
Even if a student doesn't qualify for a subsidized Stafford or a Perkins loan in their financial aid package, they can still apply for an unsubsidized Stafford loan.

These loans offer up to $5,500 to freshman students, regardless of their financial status. (Loan limits change based on the school year the student is in.) Unsubsidized Stafford loans carry a 6.8% fixed rate, which begins accruing after the loan is disbursed to the school.

How to apply: If the school is part of the direct lending program (meaning it receives loans from the federal government), students can apply for the loan through the college's financial aid office. If the school participates in the Federal Family Education Loan Program (FFELP), students will have to apply at a bank.

Take Advantage of Tax Credits
The stimulus package created the American Opportunity Education tax credit, which offers a maximum of $2,500 toward college tuition and related expenses for 2009 and 2010. The new credit replaces the Hope Scholarship Credit, which offered a maximum tax credit of $1,800. And while the Hope Credit only applied to tuition paid for the first two years of college, this law makes it applicable to the first four years -- and makes it partially refundable.

(For more on how the stimulus plan aims to help college students pay for college in upcoming years, read our story.)

Consider Scholarships, but Proceed With Caution
Scholarships can add that extra boost to help students get by during the school year. But there's a pretty big tradeoff. In most cases, scholarships reduce your financial aid package even if you receive a scholarship during the school year. (Ask your college if they have an "outside scholarship policy" that assesses how your financial aid package may change should you receive a scholarship.)

Call the admissions office (or look on the college's web site) to see which scholarships they offer, the eligibility requirements and how to apply.

Last Resort: Private Loans
Private student loans are hard to come by these days, since many private lenders have dropped out of business altogether. Those remaining have made it very difficult to qualify for a loan. Students will need a high credit score or a creditworthy cosigner.

If you do manage to land a private loan, expect to pay a higher rate as it matures. Private loans carry variable interest rates so it’s impossible to predict what the rate will be from month to month -- let alone four years from now.