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The College Cost Crunch

Recession 101

Naturally, the economic crisis has parents more freaked out than usual about paying for college. These are scary times, but higher education is still within reach, says Cindy Bailey, a senior policy analyst for education finance at the College Board, a nonprofit that manages standardized exams. Despite the cash crunch, schools will still be doling out aid, says Bailey. "There will be money available because students need it and institutions are committed." Her timely tips:

Complete all financial aid-related paperwork early and accurately.

This is especially critical now because more families than ever will be applying, including many that would not have applied even just a year or two ago. (As of February 15, 2009, the Department of Education had received 20 percent more FAFSA forms than by that date last year.) Pay close attention to deadlines and don't leave any fields on the form blank.

Don't believe the hype about loans not being available.

"I predict there will be more borrowing, especially among families who thought they wouldn't need to," Bailey says. "But despite media reports that the student loan pool is drying up, the Department of Education has been very resourceful about creating liquidity, so finding funds won't be an issue." However, because of the fiscal fiasco, there are fewer private loan providers, meaning fewer options when it comes to comparison shopping for the most favorable terms.

Adjust expectations.

"Even if it wasn't part of the plan initially, teens may have to pitch in, like by getting a part-time job," says Bailey. Stay focused on the big-picture goal -- getting a degree.
-- Celia Shatzman

Originally published in the May 2009 issue of Family Circle magazine.