Mortar board on top of cash - for money college postAs a parent with children heading toward college in the near future, I have first-hand knowledge that parents are consumed with worry over college affordability, especially in this current economy. Parents have told me that lower income families are discouraging their students from applying to high cost colleges and schools away from home because they feel they could never afford it.

Meanwhile, middle and upper income families are preparing to tighten their belts and mortgage everything they own. Not wanting to take either approach to college financial planning, I sought expert advice. A phone conversation with Seamus Harreys, associate vice president and dean of enrollment and career services heading the Northeastern University's student financial services department, filled me in on the particulars of affording college at different income levels.

Low-income families
Low-income families are loosely defined as a family of four with an adjusted gross income of $35,000.00 or less. (This amount is not set in stone and can be higher depending on circumstances.) A student whose family qualifies as low income will receive a PELL Grant, which can award the student anywhere from $400 to $5,550 per year.

If the student qualifies for the PELL grant, they will also qualify for state grants and Stafford loans. Low income students are also eligible for private finding through the college and other scholarship and grant sources to supplement their PELL grants. Colleges also supply work-study opportunities (of which the federal government pays 77%) for needy students. Merit based grants and scholarships for the outstanding and/or talented student are also available.

Middle-income families
Middle-income families generally fall into the income range between $36,000 and $100,000. Middle income students should fill out the FAFSA even if they don't think they will qualify for the Pell grant. They will at least qualify for a Stafford Loan of $5,500 per year.

Besides that, a middle-income student will need to focus on merit based scholarships and need-based grants from the school. Parents may also take out private, low-interest loans to help foot the bill for college. If you fall into this income range, it is important that you fill out your FAFSA loan as early in the year as possible and talk to the college counselor about your financial needs.

High-income families
High-income families making upwards of $100,00 should still fill out the FAFSA especially if they have extenuating circumstances or a recent income change. Although the chances of qualifying for a PELL grant is slim, there are still federal loans, and need based programs at the school that a student may qualify for.

Harreys points out that the more the college costs, the higher chances the student will have of getting need based aid, and that even families who make $180,000 may apply, although the parent will end up being responsible for a portion of the tuition. With that said, high income families should put a great deal of effort into securing merit and talent based scholarships from the college.

This information may leave middle- and high-income families in distress and in fear that they may not get much needed help to pay for college, especially in a tough economy. But there's help. There are numerous private counselors whose business it is to help families to secure financial aid and help pay for college.

One is Dan Cauldwell of Joshua CPR (college planning relief). Cauldwell said in a phone interview that middle-income families making $50,000-$100,00 can make financial decisions and tactical moves that will help students qualify for financial aid. The college the student chooses will effect the amount of financial aid and private scholarships they will receive, he said. For example, Davidson College in North Carolina meets 100% of demonstrated student need.

Cauldwell also counsels families to have the student take ownership of paying for college. He recommends Stafford Loans and work study programs so the student will understand the value of their education. He added that if a parent has the ability to pay for college themselves that they should still have the student take out loans and work. They can always reward the student after graduation by paying off the loans or giving them money toward their first home.

Both experts agree that the single most important thing a student in need of financial assistance can do is to fill out the FAFSA form as early as possible (Jan. 1), even if it means estimating income taxes for the previous year. Colleges have a great deal of money available for need-based awards, but they are on a first-come, first-serve basis. The earlier you apply for financial aid, the more likely you are to get these school-awarded funds.

Another option? WalletPop contributor Zac Bissonnette examines a variety of ways to finance a college education without taking out loans in his new book, Debt-Free U.

This is the first of a three-part Money College series on how to afford college. Coming Thursday: Why small colleges are a good choice for low-income students.

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