- The Washington Times - Sunday, April 8, 2007

About 20 parents sat in the Falls Church Community Center on a recent sunny Saturday afternoon, scribbling notes and listening intently to the presentation on how to pay for college.

“It’s just so overwhelming; any help is welcomed,” said Jayne Bryant, a single mother from Oakton who is researching the college-application process for her daughter, a high school junior.

She and the others attended a free workshop — offered by Todd Hughes, a college-funding adviser and chief executive officer of Hughes Financial Solutions — to get some advice and answers.

Joseph Fontana and his wife, Gloria Cruz-Fontana, of Fairfax Station, are starting their research early — the oldest of their four children is a high school sophomore. Mrs. Fontana said she wants tips on “how to avoid paying so much” and “how to optimize” the way to pay for college so their children won’t be strapped with loads of debt.

“Things are different than when we went to school,” Mr. Fontana said of the application process. “We’ve got a lot of worries and concerns.”

The Fontanas are not alone. Across the country, parents and teenagers alike are concerned about how to pay for college and how to navigate the often daunting financial-aid process. These are hot topics not only around kitchen tables, but in the White House, governors’ mansions and the halls of Congress.

Rising costs

It’s no secret that college costs have risen dramatically over the years.

According to the College Board’s annual study on costs, tuition and fees on average have increased 35 percent in the past five years for public, four-year institutions and 11 percent for private, four-year institutions. The figures were adjusted for inflation.

For the 2006-07 school year, a four-year public institution cost $5,836 and a four-year private institution $22,218 — increases of 6.3 percent and 5.9 percent, respectively, over the previous school year. The numbers jumped to $12,796 for a public institution and $30,367 for a private school when room and board were added.

Of course, a realistic student budget also would include transportation, books and other expenses, which — according to sample budgets compiled by the College Board — push average total costs to $33,301 for a four-year private college, $26,304 for an out-of-state four-year public college and $16,357 for an in-state four-year public college.

“It’s clearly a matter of great concern to the public and to many policy-makers,” said Terry Hartle, senior vice president for government and public affairs at the American Council on Education. “It’s an issue that merits attention.”

And it is receiving attention at the highest levels of government.

“At a time when more Americans need a degree, it’s becoming more difficult to get one — and for low-income and minority students, it can be nearly impossible,” Education Secretary Margaret Spellings said at a national summit she hosted last month to discuss the Bush administration’s ideas for making college more accessible and affordable.

Not surprisingly, many students choose to attend less expensive colleges and universities.

According to the College Board, 65 percent of full-time undergraduates attend institutions whose tuition and fees are less than $9,000, while 13 percent attend those that cost $24,000 or more. The best in-state deals are in the West, where the average public university four-year tuition and fees are $4,646 a year. The in-state option is most expensive for New England residents, who pay an average of $7,658 at public four-year schools.

To help pay for all of this, most turn to student loans. Nearly two-thirds of four-year graduates have taken out student loans, and their average debt is $19,000 — about $10,000 more than it was in 1993 when fewer than half had student loans, according to figures compiled by the Project on Student Debt.

“It has now become a significant way that students pay for public and private, even moderately priced institutions,” said Luke Swarthout, a higher-education specialist with U.S. PIRG, the federation of state Public Interest Research Groups.

What parents can do

All of this can be extremely daunting to parents, specialists agree. But there are reasons to be hopeful.

First, the “sticker shock” of college prices may be misleading.

“The net price can be a lot lower” than the publicly listed cost of college — after factoring in financial aid, grants, scholarships and work-study provided by the school, Mr. Hartle said.

“That’s a tremendous challenge for independent higher education — to encourage families to look beyond published prices,” said Bill Troutt, president of Rhodes College in Memphis, Tenn.

There is a lot of financial help out there, waiting to be discovered. That help includes about $135 billion in federal, state and private money, according to the College Board.

Mr. Hughes — whose company can be hired by parents to navigate the entire college-application process — not only urges parents to look beyond sticker prices, but also helps them fill out the complicated Free Application for Federal Student Aid — known as FAFSA — to get the maximum amount of federal aid possible.

He tells parents to apply for aid early and often and not to waste too much time seeking private scholarships because these only account for a small fraction of the money handed out. Mr. Hughes also advises parents not to shy away from more expensive private colleges since they often have more alumni money to distribute than public schools.

Especially for a lower-income family, “it might be cheaper to go to Harvard” than to a state school, Mr. Swarthout said.

There are other tips for cutting costs, including reallocating assets in order to qualify for more financial aid. Mr. Hughes also encourages parents to negotiate when a college sends a letter laying out how much aid it will provide.

It is important to remember that the federal government and colleges won’t knock down doors to give away money, he said.

“The colleges and the government are the ones who control this, and they’re the ones giving out the money, so they really have no incentive to educate parents on this,” Mr. Hughes said.

Another cost-cutting measure is to finish college sooner. Students take an average of 6.2 years to complete a bachelor’s degree at public colleges and 5.2 years at private institutions, according to the College Board. But more colleges are offering accelerated bachelor’s degree programs, which are completed in three years.

The best way to prepare for the steep college price tag is simply to save as much as possible.

One way to save for college is a 529 plan. These tax-advantaged investment plans are sponsored by states, state agencies or educational institutions.

All 50 states and the District of Columbia sponsor at least one type of 529 plan. The account’s earnings are exempt from federal tax and in most cases, state tax, as long as withdrawals are used to pay college expenses, according to a description by the Securities and Exchange Commission.

One such plan, known as the Independent 529 Plan, allows families to pay today’s tuition prices for later use at 259 private colleges and universities that are part of the network.

“By prepaying, you can actually lock in today’s tuition rates for future use,” said Nancy Farmer, president of the plan.

Marc Farinella of Melbourne, Fla., joined the plan for his 7-year-old daughter. He said in light of rising college costs it “just made sense to me.”

Miss Farmer said it’s never too late to start saving — even when a child is in high school. But ultimately, she said, Americans must learn to save for college just as aggressively as they save for retirement.

“For a 2-year-old’s birthday, do they really need another toy? How about $50 for the college fund?” Miss Farmer said.

Causes and cures

College access and affordability have been hot topics on Capitol Hill and in the Bush administration.

“In a word, it’s a crisis that’s tarnishing the American dream for millions, and we can’t ignore it any longer,” Sen. Edward M. Kennedy, Massachusetts Democrat and chairman of the education committee, said at a hearing of his panel on college costs in February.

Lawmakers on both sides of the aisle have introduced numerous pieces of legislation to address the issue, including subsidizing the student-loan interest rate, boosting the maximum federal Pell Grant award, revamping federal student-loan programs, simplifying FAFSA and holding colleges more accountable.

The House in January overwhelmingly passed a bill that would cut the student-loan rate in half for future loans; the Senate has yet to pass it.

Critics of the rate cut argue it’s a poor use of money because it doesn’t address the problem of college access and steep costs. Supporters say it’s a first step.

Increasing money for the Pell Grant — which is given to 5 million needy students each year — has bipartisan support.

President Bush’s 2008 budget proposal would increase Pell Grants from $4,310 to $5,400 over five years. Mr. Kennedy is seeking to boost the grants to nearly the same level and make funding for the program mandatory, and House and Senate Democratic 2008 budget proposals suggest increases as well.

At the same time, Congress and the administration are looking to slice some of the federal funds given to student-loan companies, an industry that some argue profits at the expense of students. Mr. Bush’s 2008 budget proposed about $19 billion in cuts to lender subsidies over five years.

Lenders say cutting their federal dollars in order to boost grant aid to students won’t really help students.

“We’d love to see the debate be about finding additional funds for education — not moving funds from one program to another,” said Joanna Acocella, executive vice president of the College Loan Corp.

Meanwhile, New York Attorney General Andrew M. Cuomo is continuing a nationwide probe into conflicts of interest in the student-loan industry, and last week the Education Department placed on leave an official who supervises lenders and also held stock in a student-loan company.

Working for change

Many of these issues will be debated this year as the House and Senate try to reauthorize the Higher Education Act. There are key differences, especially when it comes to retooling federal student-loan programs.

Members of the House education committee sent a letter last month to relevant players asking for ideas on a range of goals, including improving the financial-aid delivery system, finding ways to address escalating college costs and boosting transparency of college-cost information.

But some lawmakers say the government shouldn’t keep pouring dollars into higher education without understanding what is causing the current problems.

“Unfortunately, the skyrocketing cost of tuition minimizes the positive impact of our increases to important financial-aid programs, such as Pell Grants. We need to get to the heart of what I believe is the real problem — why costs are rising so dramatically and what we can do to stabilize this trend,” said Rep. Ric Keller of Florida, the top Republican on the House education panel’s higher education subcommittee.

He complained that the Education Department will award about $90 billion in new grants, loans and work-study assistance this year, yet college costs continue to rise. Mr. Keller has introduced a bill with Rep. Howard P. “Buck” McKeon, the top Republican on the House education panel, that would target colleges whose prices have risen the most.

Some lawmakers want more information on how colleges spend their money. Sen. Charles E. Grassley, Iowa Republican, on Wednesday asked the Congressional Budget Office to examine how colleges use their “generous tax breaks” — whether they truly use the savings to improve education or “whether the taxpayers are subsidizing other priorities.”

The administration has proposed its own steps to help children and families access college — based on a report of the Commission on the Future of Higher Education.

In September, Mrs. Spellings suggested several changes, including increasing need-based aid; simplifying the financial-aid process with changes such as a recently announced online tool to simplify FAFSA for parents and students; notifying students of their eligibility earlier than spring of their senior year; and redesigning the Education Department’s Web site to list how much a school is truly going to cost and how long it will take to get a degree.

Some argue that not enough is being asked of the colleges and universities.

Richard Vedder, economics professor at Ohio University and author of “Going Broke By Degree: Why College Costs Too Much,” said there is tremendous waste on college campuses — everything from ballooning administrative departments to increasing salaries for professors and presidents to state-of-the-art student centers and attractions.

“You can’t run a university without a climbing wall these days,” he said.

Mr. Vedder argues that the billions of federal dollars poured into student loans and grants help raise the cost of tuition.

“Why do universities raise tuition? Because they can get away with it. Third parties are paying part of the bill,” he said, referring to the federal loans and grants. “When someone else pays the bill, you’re not as sensitive to the cost of things.”

For their part, college officials say they are taking steps to lower costs.

According to the National Association of Independent Colleges and Universities, a few schools have frozen tuition. Some are offering four- or five-year tuition guarantees to freshmen, and others are adopting business practices to control operating costs, such as outsourcing some campus services.

Other colleges are banding together to leverage joint purchasing power for lower costs on energy, insurance and information technology.

But Mr. Vedder and others say more is needed — including more transparency. He would like to see an intricate breakdown of each school’s budget and how many hours professors spend teaching.

“We don’t get much of that information on colleges, and there’s no reason why we couldn’t,” he said.

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