Financial aid, college savings accounts help families pay

Oakland Tribune, Jan 11, 2004 by Michelle Maitre - STAFF WRITER

Financial aid directors say the first of the year is the best time for families to begin thinking about applying for financial aid.

The first step in receiving aid is to complete the Free Application for Federal Student Aid, or FAFSA, available online at www.fafsa.ed.gov Though the FAFSA can be turned in throughout the school year, families are encouraged to turn it in during the priority filing date between Jan. 1 and March 2. The forms can be filed even before students know if they've been admitted to the college of their choice.

The FAFSA is required to apply for most types of federal and state aid, including the state's Cal Grant program.

Cal Grants offer free money to students who meet minimum financial requirements and who achieved at least a 2.0 grade-point average in high school. The program offers grants of up to $9,700 a year that can be used to attend almost any college in California, including vocational schools.

March 2 is the deadline to apply for a Cal Grant. Visit www.calgrants.org or call (888) CA-GRANTS for more information.

All students are encouraged to apply for aid, even if they think their parents make too much money. Some students may qualify for loans or other programs, even if grants are unavailable.

California State University and University of California campuses also offer university grants to help students pay for college. California Community Colleges offer fee waivers for needy students.

A variety of resources offer information and help with financial aid programs. Contact your high school guidance counselor or university student financial aid offices.

More information is also available at www.csumentor.edu and www.universityofcalifornia.edu/admissions/financialaid.html

A number of longer term savings plans are also available to help families plan for college costs. Visit a financial planner or adviser, or your college financial aid office, for other options.

Some programs include:

- The Golden State ScholarShare program, or California 529 Plan, is akin to a 401k plan for college tuition.

Participants in the plan can sock money away for college tuition, and can withdraw it tax free to pay for qualified higher education expenses, such as tuition, books and room and board.

"Saving for college is just incredibly important, and with the increase in tuition it just makes it even more so," said Carrie Douglas Fong, executive director of the ScholarShare Investment Board, which administers the ScholarShare program.

The savings can be used at any institution throughout the nation that is qualified to receive federal financial aid dollars, Douglas Fong said.

The money families put into the plan is placed into a trust, and families can chose from one of five investment plans for their money.

So far, about 131,000 ScholarShare accounts have been opened. Visit www.scholarshare.com for more information or call (877) 728- 4338.

- A number of Bay Area private universities participate in a newly created pre-paid tuition plan that allows families to actually save on tuition costs.

Families that participate in the Independent 529 Plan buy a certificate that can be used to pay future tuition costs at participating universities.

The certificates are offered at a discount - never less than 0.5 percent - of current tuition at the college. The value of that certificate discount compounds every year from the year the certificate is purchased through the year it is redeemed.

"The plan is really targeted toward middle-income people who are going to make moderate investments over time," said Tim Warner, vice provost for budget at Stanford University, one of 200 private institutions throughout the nation who participate in the plan.

Other participating colleges include Mills College in Oakland and University of the Pacific in Stockton.

The program encourages families to save by requiring as little as $500 in contributions within two years.

"It's not only a vehicle to get families saving for college," said Lynn Fox, director of financial aid at Pacific. "The fact that you can lock in the tuition rate offers a doubling effect that can be very advantageous to families, given that there are some families that think in the long term and think about investing in education."

For more information, visit www.independent529plan.org or call (888) 718-7878.

Contact Michelle Maitre at mmaitre@angnewspapers.com