College: Saving up for higher costs

Students are becoming more conscious than ever of college costs, said Dennis Romero in LAWeekly.com. According to a new survey from UCLA, only 57 percent of entering college students ended up enrolling in their first-choice schools last year. That’s “the lowest reported percentage since researchers began tracking these things in 1974,” and there is an obvious reason: College costs have more than doubled in the last decade. The survey also found that almost half of all students-—a higher share than ever before—considered cost and the availability of financial aid to be “very important” factors in their choice of a college. The days “when high school seniors, even poor ones, set their sights on a university first and figured out how they would pay for it later” are clearly over.

Even families with above average income need help these days, said AnnaMaria Andriotis in The Wall Street Journal. As college costs soar, families earning more than $100,000 a year may be “too well-off to qualify for” federal aid, yet still not “earn enough to pay for the full cost of higher education.” There are remedies, but they require some attention and forward thinking. Parents can qualify for more financial aid “by lowering their income in the calendar year before they submit the aid application, and by shifting assets into certain types of accounts before they file.” For example, bank account balances are used to calculate a family’s contribution, but individual retirement accounts are excluded from that calculation. Remember that cash gifts from family members may “count as student income,” and that large trust funds can “wipe out any shot at financial aid.” And home-equity loans “are treated as assets” for federal aid, so “borrowing money to build an addition could result in less financial aid.”

If your child’s college days are still years away, it’s still a good idea to get a head start, said Kelly Trageser in Credit.com. The easiest way to make college affordable “is to start saving the day your child is born.” One good vehicle for that is a 529 plan, a government savings program in which “the principal grows tax-deferred, and distributions for the beneficiary’s college costs are exempt from tax.” Having a 529 can put a dent in the amount of federal aid you receive when your child is ready to enroll, but not a big one: Those savings can never cut benefits by more than 6 percent under federal aid application guidelines. And one thing is certain: Planning ahead with a 529 plan is better than “the hard way” of scrambling to find the money only once those acceptance letters start coming in the mail.

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