by Bruce Fenton

A college-bound student is likely to pay a huge price for that coveted sheepskin … $12,127 a year to cover tuition, fees, and board and room at a public institution … more than $29,000 per year at the average private college, according to the College Board.

The rest of the story is not much better. If college costs continue to inflate at the same rate as last year (6.6 percent), those same figures are $38,316 (public) and $91,627 (private) for a child born today. 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.

In 1912 the late Supreme Court Justice, William O. Douglas, rode his horse from Yakima, Washington to Whitman College in Walla Walla where he lived in a tent (his story) while working his way through school and sending money home to his widowed mother. After graduation he hired on as a sheepherder to take a trainload of sheep to Chicago, riding the rails the rest of the way to New York and Columbia Law School. This makes a wonderful story, one that is sure to win points when you tell it at the dinner table to your children … but not the case today where the cost of college now exceeds the cost of a new home in parts of the country.

The College Board tells us that last year 13 million college students in the United States received $143 billion worth of financial aid. The American Council of Education estimates that more than 10 percent of those who didn’t apply would have been eligible for some aid.

There is plenty of financial aid available to those who learn how to use the system and resources available, according to student loan originator, Sallie Mae®. On January 1, the Department of Education began accepting the Free Application for Federal Student Aid, or FAFSA.

The FAFSA process is needs-based, taking into account parental and student income, age, and assets and determines how much the family is expected to contribute toward the student’s education. If this number is less than the amount charged by the selected college, the student is eligible for the difference, which can come in the form of grants, scholarships, or low interest loans.

To understand the FAFSA process, go to the web site, www.finaid.com where you can input your financial information and calculate an estimated family expected contribution figure.

Sallie Mae’s website connects to a database with more than 2 million scholarships worth roughly $15 billion. The database lists the scholarships for which students qualify, based on their financial needs, grade-point average and academic or extracurricular interests.

For families facing college expenses, those likely to qualify for financial aid should strive to get into the best colleges possible and those likely to not qualify should seek out the most economical college programs.

In the case of the former, if the family is expected to contribute $10,000 and the cost at an Ivy League school is $45,000, the family is going to pay $10,000 whether the student goes to a state college next door, or to the Ivy League institution.

In the case of the latter, parents and student should shop for the best school possible within their budget. The student might consider enrolling in Advance Placement classes while in high school to earn college credits. These credits may cut the college stay from 4 years to 3 … a significant saving!

Scholarship and aid money typically is handed out on a first-come basis. So learn the system, apply early and apply often.

Bruce Fenton is a financial consultant, a writer, and the Managing Director of Atlantic Financial Inc. Bruce welcomes inquiries, comments, and questions. He can be reached by contacting The Fenton Report.