In the U.S., Soaring Tuition Necessitates New Strategies

For parents in the United States who have barely recovered from signing the checks to pay tuition and room and board fees for their college-bound offspring, a new report has^: only confirmed what they al­ready knew.

An annual survey just released by the College Board, a New York guidance and data group, reports that tuition and fees for four-year colleges in the U.S. are up 6 percent for the 1994-95 school year, double the inflation rate of 2.9 percent. An under-graduate at a private four-year college is paying an average $11,709 for tuition, plus another $4,976 for room and board.

At the most sought-after institutions; the news is even more disheartening. The Consortium On Financing Higher Education, a research organization funded by top US colleges, says the median tuition fee for its 31 members this year is $19,110. When room, board and fees are included, {the average final bill is a scary $26,874

Not surprisingly, even parents who have [salted away a nest egg for their child's I college education may find that they need to come up with a lot more cash to bridge the gap. And that reality is creating some profound changes in the way college is paid for in the United States.

"A generation ago, the majority of par­ents financed their kids for 100 percent of their college education," said Lewis Alt-fest, a financial planner in New York. "These days, it's more often a partnership — some by the parents, and some as­sumed by the children."

Indeed, the Federal government will lend nearly $18 billion to some 4 million American college students this year. By far, the most popular vehicle is the Staf­ford loan, where the student does not have to start repaying the principal until after graduation. Its variable rate, which is reset each July, is the lowest in the array of available loans, currently standing at 7.43 percent, up from 6.22 percent in the 1993-94 school term. A student can borrow up to $5,500 a year.

If a student loan plus savings aren't sufficient, financial advisers say the next step might be for the parents to share the load through another government vehicle called PLUS (Parents Loans to Under­graduate Students), which has no limita­tions on how much a family earns for eligibility, and can cover up to the full cost of tuition, room and board each year.

Rates on these loans, currently 8.38 percent, are also reset each July. Information on both Stafford and PLUS loans is available from the U.S. Department of Education in Washington, D.C., and from college financial aid offices.

An array of private lenders, such as Nellie Mae Inc. in Braintree, Massachu­setts, and the Education Resources Insti­tute, in Boston, have also entered the stu­dent loan business, although they often require parents to co-sign loans to stu­dents and run credit checks on both. These groups usually charge interest rates that are one to three percentage points higher than Stafford loans. Nellie Mae, is currently offering 9.75 percent.

But perhaps the most significant trend' in financing a college education is the growing use of the "financial aid package" put together by the schools themselves, and now needed by nearly half the stu­dents at private colleges. At COFHE schools, for example, this year's typical package consists of a grant ranging around $13,000, a loan of about $4,000, and a campus job that yields another $1,800. That leaves the family to contrib­ute $8,074 to pay off the grand total of $26,874.

The most obvious criterion for qualify­ing for a financial-aid package is a fam­ily's annual income. "We encourage any­one with a family income up to $100,000 to apply for financial aid," said Ted Bracken, a spokesman for COFHE. But for schools where tuition costs are lower, income eligibility ceilings are likely to be lower as well, and the makeup of the packages will vary. Mr. Bracken pointed out that other considerations also carry weight, such as having two children in college at the same time, heavy medical bills, or older parents who need protection of retirement money.

While colleges may not be happy about it, the widespread use of financial aid packages has produced another trend. In­creasingly, say some analysts, students who have been accepted at more than one school play colleges off against each other in the hope of obtaining the best possible financial-aid package. In effect, this re­sults in discounted tuitions.

"The broad issue is that colleges have gone from being sanctified to having to market themselves and be realistic about supply and demand," said Mr. Altfest. He compared filling each place in a class to the airline business, where the objective is to have each seat filled but where passen­gers will have paid widely varying fares.

Adds Mr. Bracken: "The critical thing is not to get obsessed with saving it all. Set a goal and stick to it. If you can save the first year, that's already something.

Jubith Rehak

/International Herald Tribune, October 15-16, 1994/

Set Work

I. Define the words and word combinations below. Say how they were used in the article:

College-bound, to necessitate, room and board fees, to salt away a nest egg, eligibility, to pay smb off against smb, financial aid package, a campus job, income eligibility ceilings, discounted tuition.

II. Find in the article the English for:

Сильные изменения; вырасти на 6 %; восполнить пробел; варьирующийся; ряд, цепь; консилиум; переустановить ставки; вести счета по кредитам; установить процентные ставки; написать заявление на финансовую помощь; иметь вес; высокие медицинские счета; пенсионные деньги; поставить перед собой задачу.

III. Say what is meant by:

a) The Stafford loan, PLUS, Washington DC, COFHE.

b) Boston, New York, Braintree.

IV. Enlarge on the idea:

1. Perhaps the most significant trend' in financing a college education is the growing use of the "financial aid package" put together by the schools themselves.

2. The broad issue is that colleges have gone from being sanctified to having to market themselves and be realistic about supply and demand.

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