THE BURSAR TOLLS FOR THEE

If you thought the application process was painful, you don't know pain. (Cue scary music.) That's probably the tuition bill in the mailbox right now. Rising college costs have been lamented for a generation, but this year we really mean it. The priciest privates top $30,000 for tuition alone (up an average 6 percent from the 2003-04 academic year). Add room, board and the occasional Thanksgiving trip home with your laundry (assuming you've got money left over for the shirt you haven't lost), and the tab rises well above $40,000. Price hikes have spread to the so-called affordable state schools, which are crowing because they've slowed the pace of their tuition increases to a typical 10 percent for the 2004-05 year. But that still leaves their average tuition at more than $5,000, and a total bill approaching $12,000.

Average family income has been only inching up in recent years. So the hefty increases in tuition, which follow large bumps last year, have created quite a sticker shock for parents and their college-bound children. According to the College Board, for the 2003-04 school year it cost an av-erage of $10,636 for a student to go to his own state school. For privates, the figure is $26,854. "From an affordability point of view, the system is broken," says Tom McGrath, a financial planner with Strategies for College in West Rutland, Vt. The good news is that financial aid has been growing, too: colleges,states and the federal government threw in more than $105 billion (including loans) in 2002-03, up 12 percent from the year before. Sixty percent of students now get something.

Even so, that's not as great as it sounds. More than half of the aid comes in the form of loans, and an increasing percentage of the loans are issued by private lenders that charge higher interest than the rates on traditional, federally backed student loans. Grants have grown, too, but so have the strings attached. "Over the past decade, student aid programs have been focused increasingly on affecting students' choice of institutions... [and] on rewarding academic achievement," according to a College Board report for the 2002-03 academic year. Translation: more aid money at more schools is being spent on "merit" scholarships by schools trying to lure top students.

The bottom line for most applicants is higher costs and less help. "It's not easy, it's scary," concedes Michael Bartini, director of financial aid at Brown. "It's still the best investment you can give your child, and it has payoff that lasts forever." Those benefits include lifetime earnings that are more than $1 million greater than what high-school graduates earn. Thus it makes sense to endure the temporary financial sacrifice. Still, there are ways to ease the pain:

School selection counts.
You don't have to go to the most expensive institutions, and more students have begun to learn that lesson. "Costs are so high, they are really starting to change people's choices," says Ellen Frishberg, director of student financial services at Johns Hopkins. She sees more middle-income students than ever choosing state schools and community colleges, or giving up a first choice in favor of a place that offers more money. Shoaib Rahman, an engineering student from Allen, Texas, wanted to go to Carnegie Mellon in Pittsburgh, but he couldn't swing that school's estimated $42,000 annual cost without taking on big loans, something he says his Muslim religion forbids. Instead, he's going to the University of Texas at Austin. By cobbling together savings, scholarships and jobs, he plans to graduate debt-free.

Merit awards carry their own trade-offs. When a college spends big money to make sure that you attend, "you're not going to find your peer group as the majority," Frishberg says diplomatically. "It may be that the school is looking to improve how they do within a certain marketplace." You can use that competition between schools to your advantage by applying to several that are regionally and academ-ically similar, and comparing their bottom lines after aid awards are announced. Most colleges won't admit that they'll bid against each other's aid offers, but many do. You do have some negotiating leverage, especially if you can provide information about changed financial circumstances. But that may not work at most of the elite schools. There's a group of 28, including most of the Ivies, that have agreed to offer only need-based aid and to calculate need in roughly the same way.

Play the aid game.
In general, though, the money definitely goes to families that know the right way to ask for it. Parents can start filing the financial-aid forms in the middle of their child's senior year. Schools get stingier as the year progresses. Start with the Free Application for Federal Student Aid, used by most public schools and available online at fafsa.ed.gov. Those aiming for private schools will also have to fill out the CSS/Financial Aid profile at profileonline.collegeboard.com. Some schools will require their own form as well.

Colleges use the income and savings figures detailed on those forms to determine how much you can pay and how much they'll give you, but it doesn't hurt to say, "Is that your final answer?" Parents inundate financial-aid offices every April, trying to get a better deal. Sometimes it works. At need-only schools like Brown, which don't offer merit aid, you're most likely to get a better deal if you can demonstrate some economic hardship, like a lost job or health problem that may not have been reflected on your forms. At schools that do offer merit scholarships, additional high test scores and competing offers can sometimes produce more money. Whatever you get, find out how the school intends to follow through for sophomore, junior and senior years. It's unlikely to commit to a four-year package, but if it expects the package to change a lot, you need to know about it before you settle into the dorm.

Borrow judiciously.
Most aid packages contain loans; some are better than others. Federal interest rates on loans are adjusted every year, and these days the rates are low. Stafford loans for current students have a 2.77 percent interest rate until July 1, 2005; Parent Loans for Undergraduate Students are 4.17 per-cent for the same period. But those federal programs limit student borrowing to $2,625 for freshmen, $3,500 for sopho-mores and $5,500 in junior and senior years. For more information, consult finaid.org or ed.gov.

Many students pile private loans on top of their Staffords. Schools "help" by offering their own loans, too. "We have seen more and more unreasonable loan burdens being put in front of both parents and students," says McGrath, who had one client get offered $16,000 in loans for his freshman year alone. That can make graduate school unrealistic, but some kids think the debt is worth it. Laurence Lau, of Rego Park, N.Y., is one of them. He was accepted at Cooper Union in New York City, which has free tuition for all students. But instead Lau decided to borrow big to attend Carnegie Mellon, his first choice. He took out a Citibank loan on top of his school package and his parents' contribution. "By the time I graduate, I expect to owe $40,000 to $50,000 in loans," he says. "But the school had the kind of campus life and sports that I wanted."

Do your legwork.
Sean Wargo of Valley Village, Calif., is a top student with plans to start his own mobile recording studio before he finishes college. He was willing to spend hours researching and applying for private scholarships. It paid off: Wargo is a Columbia freshman with a four-year, $40,000 Gates Millennium scholarship, a $2,500 Horatio Alger grant and enough fill-in money from the university so that he'll have to pay only about $3,000 a year. There are private scholarships for anybody willing to take the time to hunt for them (start at fastweb.com) and write the essays. Atheists from Florida and Oregonians of Danish descent all have scholarships aimed directly at them. Sometimes the best odds are for the scholarship from the local PTA or chamber of commerce.

Start early.
Of course, money in the bank is, well, money in the bank. The more parents save now, the less compromising you'll have to do later, as long as you save strategically. Don't save in traditional accounts in a student's name, as these penalize aid-seeking students most heavily. State-sponsored 529 college-savings plans and Coverdell college-savings plans shield from taxes the income they earn, as long as it's spent on college, and these plans reduce available aid only marginally. But some of these plans are laden with fees and don't offer much in the way of investment choices, so study them at savingforcollege.com.

It's also smart for parents to save for college in retirement plans and by prepaying the mortgage, suggests Susan Dynarski, a professor of public policy at Harvard. Money used to prepay a mortgage or beef up a retirement plan is usually shielded from taxes and aid, and parents can always tap one or the other to pay some of those bursar bills. But both lack an advantage that 529s offer, says Dynarski, who is the mother of two future college students and has already established a 529 plan for them: "Grandparents like having an account they can send their checks to." At today's prices, it takes all the help a kid can get.

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