What to do when the high price of higher education keeps getting higher

As high school seniors scramble to finish college applications and anxiously await admission decisions, their parents may be more worried about how they’re going to pay the bill.

The average annual cost for tuition, room and board, books and personal expenses at a UC campus is about $24,000. Many private colleges are twice as expensive. Tuition has been increasing faster than the rate of inflation and there is concern in the higher education community that only students from the most affluent families will be able to attend private colleges.

A number of prominent schools have taken steps to help make college more accessible to low- and middle-income families.

A number of prestigious colleges, including Amherst, Davidson, Princeton, Williams and Harvard, have decided to replace loans with grants for all students who qualify for financial aid. Harvard will no longer require families with an income under $60,000 to contribute to the cost of college, and families with incomes as high as $180,000 will pay no more than 10 percent of their income toward a Harvard education. In addition, the school will stop using home equity in determining financial need.

With the largest endowment of any college in the country, Harvard can afford to be more generous. But other schools are also making changes in financial aid policies. Administrators at Duke have also decided that parents of families with incomes below $60,000 will no longer have to contribute toward their child’s education, and if the income is under $40,000, the student will qualify to receive grants. Loans at Duke will also be reduced or capped for all students who qualify for financial aid, even those from families with incomes over $100,000.

Closer to home, Cal Tech has just announced that it is replacing loans with grants for all new students from families with incomes up to $60,000. More schools are likely to announce new financial aid initiatives in the near future.

How do parents apply for financial aid? Most colleges use the Free Application for Federal Student Aid (FAFSA) to determine eligibility not only for federal and state aid, but also for their own institutional aid. The FAFSA can be filed beginning Jan. 1, and within a few weeks you will receive a Student Aid Report (SAR). The most important piece of information on the SAR is the Expected Family Contribution (EFC), which is the figure the colleges use to determine financial aid packages. The difference between your EFC and the cost of attending is your financial need.

For example, if the annual total cost of attending a school is $42,000 and your EFC is $23,000, your financial need is $19,000. The financial aid office will then assemble a package of grants, loans and a work-study job. While the most selective colleges often guarantee to meet full demonstrated need, at most schools there is a gap between the aid package and a student’s need, leaving the family to find a way to make up the difference.

Financial aid packages can vary even among similar colleges. A student’s third-choice school may offer a lot of grant money while his first-choice school’s package is primarily loans. Being able to graduate without facing years of monthly loan payments can be a great reason to move the third-choice school to the top of the list.

Many parents wonder if applying for financial aid makes a student less attractive to a college. The truth is that it depends on the school. Colleges that have a need-blind admission policy make their admissions decisions without even looking at whether a student has applied for financial aid. The UC system and most highly selective schools fall in this category. Some schools that try to be need-blind during the admissions process do consider financial need when they are taking students off a waiting list, since by that time financial aid resources have often been depleted.

Earlier is better when it comes to applying for financial aid. Most colleges have limited resources, and once the money is gone, that’s it. It’s perfectly acceptable to use your best estimates on the FAFSA and make corrections after your income tax returns have been filed.

To complete the FAFSA, visit ” target=”_blank”>www.collegeboard.com. A good Web site for financial aid information is