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Paying for College at the Last Minute

Oh, sure, if you had started saving soda-bottle money when you were five, you'd have thousands of bucks squirreled away to cover that big tuition bill that's staring you right in the eye.

Better yet, if your parents had said no every time you wanted a new Barbie or the latest CD and had put the money in a tech stock instead -- prudently selling it three years ago -- you could be attending any school that would have you.

But let's just say that things didn't work out that way for you, and now you're scrambling for the cash to matriculate. Here are some suggestions to get you through school without amassing the debt load of a small nation. (In Part 2, we'll look at some popular ways to pay for college that aren't such good choices.)

1. Apply for scholarships and grants. But be careful. According to my sister, who bought one of those books that supposedly lists every source of free educational money, most of the material was either out of date or just plain wrong. In the process of contacting every likely source of funding, she sent out 150+ letters and received less than 20 replies and no money. Most of the replies were along the lines of "Thanks for asking, but where did you get the idea we were giving out scholarship money?"

On the other hand, there really is a lot of scholarship money around. The best source of information is your college financial aid office. If you want to be sure you've covered all bases, try Fastweb.com.

2. Take out a loan. Federally backed student loans are wonderful. They have made it possible for many, many people to get a higher education, which translates into higher lifetime earnings and a shot at a better life. The best part is that when you fill out the Free Application for Student Aid (FAFSA), you are evaluated for a Pell Grant (free money that doesn't have to be repaid) at the same time. It's not too late to apply. The process is... well.... you're applying for money from the federal government. It's a pain -- what did you expect? But the good news is that applications are handled fairly quickly, especially if you apply via the Web.

Note: If you have extraordinary circumstances, talk to your college financial aid officers. They have the power to make individual assessments based on information that might not be covered in the standard application.

3. Get a job. I don't know of any academic papers on the subject, but from personal observation I would bet that students who work during college have higher grades than those who don't. If you are falling for the idea that you need to devote yourself full-time to your studies, think again.

A part-time job forces you to organize your time more efficiently, establishes the real price of beer (when you realize that you had to flip burgers and drain fries for an hour to buy that six-pack, it takes on a whole new value), and soaks up time that would otherwise be spent doing those things that kids who flunk out wish they had not gotten involved in. Oh, yeah -- it brings in money, too.

3a. Get a good job. Washing dishes at the campus cafeteria is a respectable way to get an education and good training for when you are a CEO, but if you spend some time developing an in-demand skill like computer repair, programming, networking, or, heck, even auto repair, you can easily double or triple your hourly take even if you're just out of high school.

3b. Better yet, get a job for a company that subsidizes educational expenses. Ask around. Larger companies that hire lots of college graduates are your best bet.

3c. Go co-op. Many colleges participate in cooperative education programs where students work in a field that interests them while attending college. You earn while you learn, and come out of school with a resumé that doesn't have to be padded with stories about the valuable life lessons you learned washing dishes.

4. Start with a community college. Community colleges are some of the best bargains in history. For those who understand that you get out of a class what you put into it, they offer the best education for your dollar that you can get. And here's the best part: Once you transfer to State U and get that B.A., Little Ol' CC doesn't have to go on your resume. From an informal survey and personal observation, the quality of the instructors and the instruction is the same (if not better) at community colleges as the instruction you would find at a four-year university. (If you think you will get better "professors" at a "real" university, just ask someone who's been to both. At least community college instructors don't palm their classes off on grad students.)

5. Pick a cheaper school. The debate over whether an education at an elite school translates into higher lifetime earnings rages on. Some studies have claimed that the cost of a highly selective and challenging school is justified by higher earnings. Others have found flaws in those studies' methodology. (Academic debate -- don't you love it!)

One of the best studies looked at students who were accepted at prestigious schools but chose to go somewhere else (so the study was looking at students with the same qualifications). The choice of school didn't affect earnings at all except for those at the low end of the income scale. Students from lower-income families saw a small increase in lifetime earnings if they attended the more prestigious school, presumably because of better social networking opportunities. For most students, however, there was no difference.

On the other hand, some highly competitive schools can put together killer aid packages, and that aid isn't limited to those who apply as freshmen. My advice to consider a cheap school is aimed at those who are still trying to figure out a way to pay for college this year. If you have more time, by all means apply to the best. Just don't get suckered into thinking that your life is over if you can't afford them.

My take -- the higher average salaries paid to ivy league graduates is due to two things: 1) These guys were pretty smart to begin with, and 2) they had good connections, even before they went to Harvard.

Want to increase your lifetime earning power? Go to the best school you can afford. Take challenging courses, study hard, ask questions, volunteer for leadership positions, and make lots of friends who do the same. You're gold.

Part 2: How NOT to Pay for College

Ann Coleman is proud that she attended Hillsborough Community College in Tampa, but, no, she doesn't list it on her resume. As a grad student, she taught Journalism 201 -- and was darn good at it. Stocks that she owns now are listed in her personal profile. The Motley Fool is investors writing for investors.


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