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Four ways to save big on the cost of college

As the financial aid season heats up, a few moves can save families thousands of dollars.

By G. Jeffrey MacDonaldCorrespondent of The Christian Science Monitor / January 19, 2006

For families facing college bills either in the near future or several years down the line, the picture isn't pretty. Grants have become a shrinking slice of the student-aid pie, boosting the importance of cost containment. In addition, college costs keep rising faster than inflation. Students at four-year public colleges this year will pay an average of $12,127 to cover tuition, fees, and room and board - up 6.6 percent from last year, according to the College Board. The average four-year private college now charges more than $29,000 for a year on campus.

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What's more, congressional budget cuts mean variable-rate federal loans, with rates as low as 4.7 percent, will lock in July 1 at higher fixed rates. Stafford loans, the most popular of all, will be fixed at 6.8 percent while Parent Loans for Undergraduate Students (PLUS) will be fixed at 8.5 percent.

But don't despair. As the financial aid season heats up this month, a few savvy moves can save families thousands of dollars, say experts.

First step for those with college-age children: Do your taxes now. Then use the tax return to fill out the Free Application for Federal Student Aid (FAFSA), which schools use as a basis for many award decisions. Since decisions often occur on a first-come, first-served basis, early-bird filers have a better chance of getting the financial-aid worm. After that, consider these four strategies to keep costs down:

1. Scholarships: apply, apply, apply

Brett Taylor of Oil City, Pa., has two sisters attending public universities, but he's spending less than they are to attend Allegheny College, where the price tag is $33,500. The secret: three scholarships worth a total of $11,000.

"I had butterflies in my stomach for a couple of months, thinking about taking out $15,000 in loans" to supplement his family's savings, Mr. Taylor says. Instead, needing to borrow only about $4,000 per year in federal Perkins and Stafford loans was "a big relief."

Like many scholarship winners, Taylor beat his local bushes for opportunities. Through his high school guidance office, he found two scholarships earmarked for Allegheny students from Venango County, where Oil City is located. Then he got creative, seeking funds earmarked for a student enrolled at either Yale University or the Massachusetts Institute of Technology. Since no one qualified this year, some of the funds went his way to the tune of another $2,000.

"Even if you think a lot of people are applying [for a particular scholarship], a lot of them aren't," Taylor says. "So it's worth it to try because you might get it."

Applying for lots of scholarships doesn't have to be a burden, says Ben Kaplan, author of "How to Go to College Almost for Free: 10 Days to Scholarship Success."

"In the process of filling out your college applications, you've already done a tremendous amount of work, so then go apply for scholarships because so many of the components [in a college application] are reusable," Mr. Kaplan says.

2. Try low-cost schools

Wendy Whiton of Bethlehem, N.H., has a high school-age son with a dream to attend the University of New Hampshire (UNH) in Durham. But at $16,810 per year, the family of six can't afford to send him there for four years.

Solution: He plans to spend his first two years commuting to a technical college in Concord, N.H., then will transfer to UNH. "When you transfer, your [future] employer will see the college you graduated from, so it doesn't really matter where you did your first two years," Mrs. Whiton says. Her son, she adds, "is a pretty practical kid."