It pays to be prepared for kids’ college expenses

If you’ve got kids ready to enter college next year, you’re already well into the process of planning how to pay for it.

Or at least you should be.

Deadlines for financial aid applications have passed for regional schools, although you can still take a shot at getting financial aid. If you haven’t yet filled out the complicated and cumbersome FAFSA – the Free Application for Federal Student Aid – you’re seriously behind and will be at a disadvantage for the wide range of aid your school hands out. But you can file for the 2009-’10 school year through June 30, 2010, and you may still be able to qualify for grants or loans.

“There’s always a good reason to file it,” said Bruce DeFrates, director of financial aid and scholarships at Eastern Washington University.

You can get the form and help at www.fafsa.ed.gov.

More likely, you’ve applied and are hearing back about your financial aid package. And now you’re wondering how you’re going to cover it all – and whether the big stimulus package just signed into law includes any immediate stimulus for you and your college-bound offspring.

So here are some questions and answers for families who are starting to see their first tuition bills on the horizon. Q. Families are awaiting their financial aid packages back from schools. What can you do if the aid amount falls short?

A. You can try to appeal the decision and seek more money. If you’ve taken a financial hit since your FAFSA application was filed, you might be able to get an adjustment in the amount your family’s expected to pay.

“If there’s been a change in family circumstances or if you’re anticipating a layoff or losing some kind of benefit … you should talk to the financial aid office about having those circumstances considered,” DeFrates said.

Still, most of these options are long shots. The most likely outcome is you’ll have to somehow cover the “expected family contribution.”

Make sure there aren’t scholarship funds available – millions in scholarships go unused each year. Check out a list of some sources at www.collegeboard.com.

Q. Is it time to start borrowing?

A. If you don’t have a healthy college fund to draw upon, it could well be. Debt is a fact of life for a majority of college students these days – some 60 percent of graduates leave school with debt, at an average of more than $22,000 each. Subsidized loans, such as the Stafford or the Perkins, offer the best terms, but they’re usually included as part of the financial aid package. If you’re looking for more, parents can take out a Parent Loan for Undergraduate Students and students can take out an unsubsidized Stafford loan.

Both of those options will offer more attractive terms than private loans, which should be a last resort. They may also be much more difficult to find now, as a ripple effect from the banking crisis.

Q. Is there any direct help in the stimulus plan?

A. A little. The plan, recently signed into law, raised the maximum award for the need-based Pell grants to $5,350 a year, DeFrates said. In addition, the plan includes an extended, expanded tax break for the parents of college students – $2,500 a year for 2009, 2010 and perhaps longer.

The Obama administration also plans a series of other changes, including some extra assistance for students. These changes aren’t part of the stimulus bill and, if approved, wouldn’t take effect until next academic year.

They include another hike in the maximum Pell grant award (to $5,550) and a provision that would tie the award to inflation, as well as plans to expand access to student loans. The proposals would also end the system of banks lending to students under a federally subsidized program, and have the government make all student loans directly at rates set by Congress.

Q. What about families planning for the longer term?

A. If you’re saving in a market-based plan of some kind, the near future may be a scary – but ultimately profitable – time, some observers say. Although there’s been a waning of the certainty that stocks always win out in the long term, financial experts still tend to say that for long-term investing, the biggest gains come right when the market starts to turn around.

We’re not there yet; thus, they would argue, the biggest days of potential profit are still to come. If your youngster is years away from matriculation, you might consider taking advantage of it – if you can stomach the risk. The closer you are to college age, the less risk you’ll want to take, supporters of this approach say.

For residents of Washington, the state-sponsored GET plan offers another kind of opportunity. The plan allows people to buy tuition at today’s rates; this year’s sign-up period is set to close at the end of March. But with state budget cuts looming and colleges seeking authority to set their own tuition, the possibility that tuition will rise seems very good – making an investment in tuition now a potentially wise move.

You can check out the GET program at www.get.wa.gov.

Idaho offers a 529 savings plan called Ideal: https://idsaves.s.upromise .com/.