Karen May admits to middle-of-the-night anxiety spells over the daunting challenge of coming up with the money to put her daughter, now a high school senior, through college.
The stock market's steep dive has knocked 25 percent to 30 percent off the value of the 529 savings plan she'd been contributing to since Brie was born, putting her goal of contributing $15,000 a year out of reach.
But the 48-year-old accountant from Vernon, N.Y., has found a key way to hopefully make some of it back besides cutting spending, skipping vacation and working a second job: She spends hours every week researching financial aid options with her daughter.
"With aid possibilities coming from so many different sources — federal, state, colleges, local and national scholarships — the process is time-consuming and somewhat complicated, especially for kids who have little or no preparation in financial areas," said May, a single parent.
Putting in the hours and staying organized is essential, she said, and participating in online forums like College Confidential and Student Doctor also has turned up valuable information.
Brie has been accepted at four schools so far — Butler, Wilkes, Massachusetts College of Pharmacy and Duquesne — with financial aid packages yet to come. Then her mom can start applying her newly gained knowledge to the next student in the house, 16-year-old son Dylan.
Here are eight basics that parents of college-bound students who may not be doing all their financial aid homework should know as a 2009 aid season fraught with economic concerns begins:
1. Apply ASAP. Parents with high school seniors or returning college students should fill out the Free Application for Federal Student Aid now to have the best chance of receiving aid. This 102-question document is used to determine eligibility for federal aid, state aid and scholarships, and this year there are likely to be more applicants vying for less grant money.
"It's always a good idea to apply for aid early, but especially this year," said Lynn O'Shaughnessy, a personal finance journalist and author of "The College Solution: A Guide for Everyone Looking for the Right School at the Right Price." "The feed trough's going to be a lot more crowded, and schools may run out of money sooner."
Don't wait until your 2008 tax return to file; you can submit an online FAFSA at www.collegeboard.com using estimated tax information to speed the process.
2. Don't rule out pricey schools. A high sticker price doesn't necessarily mean a higher out-of-pocket cost, especially at schools where significant merit aid might be available.
"Don't just apply to the local community college because you think it's all you can afford," said Lauren Asher of the Institute for College Access and Success.
3. Don't forget the profile. Remember to also fill out the CSS/Financial Aid Profile, used by many private colleges and universities to determine aid eligibility. The form and more information are at the Web site of the College Board, www.collegeboard.com.
4. Look at less selective schools. While you're shooting high, make sure you are applying to less selective schools than you might have otherwise to add to your margin of financial safety. Your student might qualify for a merit scholarship or get a good need-based package. Or it may just make more financial sense.
"In a boom economy we allowed our children to apply wherever they wanted and we said, 'If you get in, we'll make it happen,'" said Rod Bugarin, financial aid adviser for college consulting firm IvyWise and a former financial aid officer at Brown University and Columbia University. "Now families are saying 'Maybe you should think about other schools, other opportunities.'"
5. The loss of home equity value won't help. Newcomers to the aid process may assume or hope that a big decrease in their home value will put them in line for more financial aid. That's not likely. Household income counts by far the most in the aid equation that also considers non-retirement assets, number of family members in the household, number of kids in college and taxes.
6. Look for scholarships online. Private scholarships offered regionally and locally may help you fill the financing gap even if your student isn't brilliant. Some of the best-known scholarship search sites include Fast Web, Scholarships.com and the College Board's Scholarship Search. Also check with your high school guidance office.
7. Call aid offices. Don't hesitate to call the financial aid offices of schools your student is considering for information on available aid or for assistance. A better financial aid offer from a similar school could also be valuable fodder to take back to the first-choice school this spring.
8. Be wary of taking on too much debt. Federal loan limits have been increased, and parents may be able to find money to finance their child's dream college even in the midst of the worst economic crisis in decades. But think carefully about the consequences of over-borrowing before taking on a huge debt burden just because you can.