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STANFORD -- Normally, high schools would be distributing federal financial-aid application forms to college-bound students around the middle of November, giving their families time to dig through records and submit the forms early in the new year.

The bad news is that, this year, the forms are going to be late . . . very late.

"Not only do we not yet have a federal form, there doesn't appear to be any clearance on a federal form," said Robert Huff, director of financial aids at Stanford University. "That concerns me, because it threatens our ability to inform students of their aid at the time we inform them of admission, in the spring. It's going to be quite chaotic, I fear."

The good news for parents is the reason for the delay: The Higher Education Amendments of 1992, signed into law in July, which promises something for everyone: higher Pell Grant limits for low-income students (subject to annual appropriations); a non-subsidized loan program for the middle class; a more sympathetic need-analysis formula; and a simplified, streamlined application process.

"The legislation provided for the most significant changes in financial aid that I can remember in the last 20 years," said Huff, who has overseen financial aid at Stanford since 1958. "Generally speaking, it has the prospects of making it easier for students and parents to pay for college."

One provision of the law is the new Federal Family Education Loan Program, which will make it possible for middle-income families to borrow the entire amount of their student's educational costs - minus any financial aid they may have - at a government-guaranteed low interest rate. Payment of the principal can be deferred until after graduation.

"This may increase the amount of educational debt that some families are getting themselves into," Huff said, "but overall it's positive."

Another change for classes entering in 1993-94 will be in the way parental and student contributions are calculated.

For example, the old Federal Congressional Methodology (the formula most colleges and universities use to figure need-based aid) required a minimum student earnings contribution of $700 for freshmen and $900 for upperclassmen. However, because many low-income students have trouble finding summer jobs, Congress decided to eliminate the minimum student earnings contribution altogether.

The new methodology also eliminates home equity from the calculation of parental contributions toward college costs.

"That will be applauded by most parents," Huff said. "One of the principal complaints I've heard over the years is, 'I can't sell my house to send my child to college, and my income isn't high enough that I can get a home-equity loan and maintain monthly payments.'

"So, this is a positive development for them. It will likely be an expensive development for colleges."

Huff estimates that Stanford's current $27.5 million scholarship budget would have to be stretched another $4.2 million next year to accommodate the federal need-analysis changes.

About two-thirds of Stanford undergraduates are on some form of aid; 77 percent of it in the form of scholarships and grants. The university has a need-blind admissions policy - admitting qualified U.S. students regardless of their financial status - and makes every effort to meet their computed financial need through grants, loans and part-time jobs.

Meeting that need, however, has proved increasingly costly in recent years.

Like most private universities nationally, Stanford significantly increased its need-based financial aid program during the 1980s as tuition rose (to its current $16,536, plus $6,314 for room and board), government grants failed to keep pace, and the university worked to diversify its student body.

This year, Stanford increased its undergraduate scholarship pool by $2.8 million, in part to keep a lid on student debt and the need for school- year jobs. The university also has tried to reduce scholarship expenses by requiring non-custodial parents to pay their share of tuition, and by verifying family claims about sibling college attendance.

Any worsening of the economy would increase need further. Huff anticipates that requests for 1991-92 financial aid, which are still arriving, will exceed 1990-91 levels by about 10 percent.

"We are definitely seeing the effects of a recession," he said. "We're hearing of cases where the resources are not there that were available in prior years, certainly if the parents are in business or losing their jobs. How can parents and students best prepare for the financial realities of college in the 1990s?

"I still think the best advice is what I've been giving for years," Huff said "Decide which college you feel is right for you, regardless of cost. Then, if you feel you need help to attend that college, by all means file a financial aid application.

"If you don't get aid, then go back the financial aid office and discuss your circumstances further, making it clear that that is the college you really want to attend. The more selective the institution, the better your chance of receiving help."

Among his other tips:

  • Create a permanent file in which to retain all materials pertinent to financial aid, including bills, receipts, canceled checks, correspondence, copies of application materials and tax statements.
  • Make sure the college always has up-to-date permanent and local addresses to ensure receipt of all information, application materials and award notices.
  • Apply on time to university and government agencies to ensure the most favorable financial aid consideration. Late applicants may be asked to assume greater self-help than those who apply on time.
  • Check into financing programs. Many colleges have established parent loan programs, designed to help middle-income parents pay for a college education in regular installments, over an extended period of time, and at a market interest rate.
  • Investigate independent financial aid sources, particularly those offering scholarships, and apply for appropriate programs.
  • Finally, Huff said, consider investing in tax-exempt bonds for later college use. "They're a very useful vehicle," Huff said. "Any effort to save for college is going to expand choice."

-tmj/financial aid-


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