Think you can't afford college in 2005? Think again, experts urge

Hundreds of thousands of college students will have a little less money coming their way next year from Uncle Sam. For low- and moderate-income families who already feel like they're in the grips of the college-costs vise, it's yet another round of tightening.

But in the spirit of the New Year, financial-aid experts are urging people not to throw their hands up in despair.

Colleges and private organizations are doing what they can to increase scholarship dollars - and not just for those who have stellar grades and SAT scores. Many families simply don't realize how much aid they'd qualify for - from both the government and other sources - if they'd actually take the steps to apply.

"Paying for college is hard. It's always been hard," says James Belvin, Duke University's financial aid director, "but [if they're] willing to make some sacrifice ... willing to look for all available resources, willing to save as much as they can and then perhaps borrow some ... most any family in this country can send their student to the school that he or she deserves to go to."

About 850,000 people who probably would qualify for a federal Pell Grant do not fill out the financial-aid form known as the Free Application for Federal Student Aid (FAFSA), according to a recent study by the American Council on Education in Washington. Currently about 5 million people receive those grants - ranging from a few hundred dollars to a maximum of $4,050 a year.

But a controversial update in the way Pell Grants are calculated will cut off eligibility for 80,000 to 90,000 moderate-income students. The Advisory Committee on Student Financial Assistance (ACSFA), created by Congress, also projects that 1.2 million lower-income students stand to lose $200 to $300 each.

That may not sound like much, but some experts say the students could also lose state or institutional aid that's based on the federal formula. "It's a double whammy that may hit some families," says Dallas Martin, president of the National Association of Student Financial Aid Administrators in Washington.

The state and local tax information that the federal government has been using to calculate a family's ability to pay for college is more than a decade old, and will now be replaced by 2002 tax data. Congressional opponents argue those figures are also out of date, and any adjustments should be phased in to avoid sticker shock for current students. But the Department of Education says the changes will take effect in 2005. The government expects to save $300 million on a $12.4 billion program.

Some students who lose Pell dollars will automatically get more money from their college to make up the difference. Mr. Belvin says Duke and many of its competitors will cover whatever amount of need is not met by grants, subsidized loans, and student jobs.

But many schools don't offer their own aid, so students will have to borrow more, including unsubsidized loans with less favorable rates.

"The bottom line is, it's making it harder for moderate-income families to pay for college," says Brian Fitzgerald, staff director of ACSFA.

The broader problem, Mr. Fitzgerald says, is that there's nearly a $4,000 gap between the average aid awarded to low-income students and the amount of financial need they demonstrate. "That's keeping hundreds of thousands of students out of four-year colleges and almost 200,000 out of school altogether."

The education and financial-aid communities haven't done enough to help families navigate the process, Mr. Martin says. "Unfortunately, high school counselors have very heavy workloads ... and many can't keep up with the various options available."

The Internet has helped, but those who already face the most barriers, such as first-generation college-bound students, can be the hardest to reach with information.

There are outreach efforts to be found, however. A number of states are sponsoring "College Goal Sunday" in February, where families can bring tax returns and get help filling out the FAFSA.

Another resource is the website ScholarshipCoach.com. It includes free search engines for awards based on a wide range of criteria. "There are tens of thousands of organizations out there that all want to recognize different things - some awards are based on overcoming obstacles, others are for artistic ability," says founder Ben Kaplan, who funded his Harvard education by finding more than two dozen scholarships.

The experts' main advice: Start planning your financial-aid strategy today. If college is coming up next fall, you can estimate your taxes now and submit a FAFSA as early as Jan. 1, Mr. Kaplan says. If you wait until spring, some pots of money will already have been handed out.