Paying for college: Keep your child's options open

As New Jersey’s public school employees, we encourage every student to view education as a life-long process. And about eight out of 10 public school graduates in New Jersey continue their education after high school.

 

We know, however, that formal higher education can be costly. The average cost of attending a public four-year college (tuition, room and board, books and other expenses) is more than $15,000 per year.*

If your child has the desire and ability to continue his or her education, don’t allow a lack of funding to rule it out. Many families have given up such opportunities because they assumed a student wasn’t needy enough or outstanding enough to qualify for financial assistance.

Be sure to explore all of the options. Chances are, regardless of your circumstances, your child is eligible for some type of financial assistance for higher education. In addition, get an early start. For a student enrolling in college in the fall, you should begin applying for financial aid between January 1 and March 1 of that year.

*2002-03 estimate

Types of assistance

Generally, there are three types of financial assistance for higher education:

  • Grants and Scholarships - aid that does not have to be repaid.
  • Student Loans - low-interest loans directly to students, typically allowing for repayment to begin after the student graduates or leaves college. Some loans made to the student’s parent(s) require repayment to begin immediately.
  • Student Employment - a job, often found through the student’s college, that pays wages funded by a financial aid program; in some cases, wages can directly offset tuition or expenses.

Information on both federal and state financial aid programs can be obtained by contacting the NJ Higher Education Student Assistance Authority at 1-800-792-8670 or on the internet at: www.hesaa.org.

'Demonstrated need'

A student need not be “poor” to qualify for financial aid because eligibility is based upon what his or her family is able to pay – the “family contribution” – as compared to the total cost.

Federal and state financial aid programs award aid on the basis of “demonstrated need” – the difference between the cost of attending a particular college and the expected family contribution. All colleges and federal aid programs use the same formula for calculating the expected family contribution. This amount will be the same at all colleges, but eligibility for financial aid will vary with cost. For example, if the family contribution is $2,000 for a student attending a college costing $8,000, that student would be eligible for financial aid of up to $6,000. But if the same student attends a college costing $3,000, financial aid would be limited to $1,000.

Your child’s high school guidance counselor can help you obtain a copy of the Free Application for Federal Student Aid/FAFSA, which is used by both federal and state financial aid agencies, as well as most colleges. You can also complete the form online at: www.fafsa.ed.gov

Grants and scholarships

Grants and scholarships are the most desirable form of aid because they don’t have to be repaid.

Federal programs include Supplemental Educational Opportunity Grants and Pell Grants, both of which are based upon demonstrated need.

State programs include: Tuition Aid Grants (TAG), which are based on demonstrated need and which fund tuition only; Edward J. Bloustein scholarships, which are based on academic achievement regardless of financial need; Urban Scholars grants, which provide additional Bloustein Scholarships to high-achieving urban students; NJ Educational Opportunity Fund Grants, for students from educationally and economically disadvantaged backgrounds; and NJ World Trade Center Scholarships, to aid the dependent children and surviving spouses of New Jersey residents killed in the terrorist attacks on September 11, 2001.

Other programs include a host of grants and scholarships offered directly by most colleges and by service organizations, veterans and civic groups, religious institutions, private corporations and foundations, unions, and professional organizations. Consult your child’s high school guidance counselor, as well as the local library and/or the internet for more information. (One resource for reliable financial aid information is: www.collegeispossible.org)

Student Loans

Loans are the most readily available form of financial aid. Before pursuing a conventional loan, however, look into federal and state programs offering subsidized loans to students or their parents. These are generally available up to the full amount of college expenses, minus any grants or scholarships a student receives.

Federal programs include Stafford Student Loans, deferred loans which are available to all families by applying through a lending institution or directly from the federal government; and the Parent Loan for Undergraduate Students (PLUS), offering low-interests loans to all families of undergraduates. Stafford Loans include subsidized programs which are available based on demonstrated need. Repayment of all Stafford Loans must begin within six months of the student graduating or leaving college. PLUS loans must be repaid beginning six months following disbursement of funds.

State programs include NJCLASS, a loan program for which all New Jersey students are eligible, including out-of-state residents attending New Jersey colleges and universities.

Savings programs

There are many ways of saving for your children’s higher education needs, and it’s never too early to begin putting money aside. In addition to your own savings and investments, there are options specifically geared toward saving for higher education:

* NJBEST — In New Jersey, the qualified state tuition program (also known as a 529 college savings plan) is the NJ Better Education Savings Trust (NJBEST). The NJBEST program allows families to save for college without paying state or federal taxes on earnings from that savings. In addition, participants can automatically qualify for NJBEST scholarships and enhance their eligibility for other need-based state financial aid programs. For more details, contact NJBEST toll-free at 1-877-465-2378 or at: www.njbest.com.

* Education IRA — Another newer savings option is the Education IRA. While the contributions are not tax-deductible, the earnings on contributions are free of federal taxes, so long as the money is used for qualified withdrawals to pay education expenses. (For annual contribution limits and details on eligiblewithdrawals, consult your tax advisor or visit .)

We want to help

Planning for your child’s continued education can be complicated. If you need help, your child’s teacher or guidance counselor will welcome the chance to share some suggestions. Our interest in your child doesn’t end with high school graduation.

In addition, each college has a financial aid office to help guide students through the process. Contact them, too.

School staff and families...the more we work together, the more we'll help our children.

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Resources on the Web

  • Free Application for Federal Student Aid (online application used by federal and state financial agencies and most colleges) – www.fafsa.ed.gov
  • NJ Higher Education Student Assistance Authority (NJCLASS loans, Tuition Grants, scholarships) – www.hesaa.org
  • NJ Better Education Savings Trust (NJBEST, the State’s 529 college savings plan) – www.njbest.com
  • NJ Commission on Higher Education (Education Opportunity Fund and grant programs) – www.state.nj.us/highereducation
  • College is Possible, Coalition of America’s Colleges and Universities (includes reliable information on available grants and scholarships) – www.collegeispossible.org

School staff and families...the more we work together, the more we'll help our children.