Finding money for college

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Many students need financial aid, and here’s some practical advice.

By Lisa King

How will you pay for a college education?

This is a question that bears on the minds of students and parents alike, especially this time of year, with the fall semester looming just around the corner.

The topic of student financial aid is very broad and encompassing, but K.C. Crahan says it basically boils down to three types of options – getting a grant or scholarship, a student loan or drawing upon funds that have been set aside for that purpose.

That last option is his area of expertise.

As the owner of Crahan Wells Management in Shelbyville, a financial advising company formerly known as Hilliard Lyons, Crahan knows the ins and outs of financial preparation for college, especially after putting three children of his own through college.

What he stresses most is to start early.


Prepaid plans

“In planning for college, it’s best to start out when they’re a newborn,” he said. “The best thing is to start a 529 plan.”

This savings education plan, named after Section 529 of the Internal Revenue Code, was created in 1996 to help families set aside funds for future college costs.

Generally, these funds can be used for a college in any state. The plan works much like a 401k or IRA by investing the money in mutual funds or similar investments.

But Crahan cautions that if a student has this type of plan and it will not pay for the entire cost of his or her education, then the student should use the funds for the latter part of their college years.

“That’s because as soon as they start using it, it will start counting as an asset, and that can mess you up when you’re applying for financial aid,” he said.


Applying for aid

Another very important thing that students should do  Crahan said is to fill out the Free Application for Federal Student Aid (FAFSA) form.

“Every college looks at it,” he said. “It shows assets of parents and children alike and lets you know the student’s eligibility to get scholarships and grants. Also, filling out one of these forms keeps you eligible, so it’s of the utmost importance.”

The deadline is June 30 to submit the FAFSA form for 2010-11.

Also, corrections for  2009-2010 forms must be submitted by midnight CDT Sept. 21. In addition, some state deadlines could be earlier than this, so to find out more deadline information, visit www.fafsa.ed.gov, where you also can find more information on filling out the form, which can be a little intimidating, Crahan said.

“It’s a difficult paper to fill out, but well worth it,” he said.

The form can be obtained online or from a high school guidance counselor.

Jefferson Community and Technical College financial aid officials did not return calls to The Sentinel-News, but the school’s Web site recommends stopping by the school to pick up a copy of the How to Apply Guide, a comprehensive booklet which outlines the types of financial aid available and how to apply for it.

If a student wants to apply for a loan, Crahan said student financial aid advisors can help students find the appropriate institution.

“Lots of colleges will hook you up with a financial institution for a student loan,” he said.

In addition to student loans, which must be paid back, students may also apply for grants and scholarships, which they are not required to pay back.

It’s very important to apply for grants and scholarships as soon as possible, because even if a student qualifies, the money allocated for that fund may be exhausted if the student waits too long.

Also, deadlines to apply for these types of financial aid vary from college to college, so early application is vital.


Test scores matter

And, of course, a key element is that the better the scores on college entrance exams, such as the American College Test, the more qualified a student would be to earn a scholarship. Better scores also equal better funding opportunities.

It is also possible to the take the ACT more than once if a student wants a better score. Also, students can take classes that prepare one for taking the ACT, which greatly enrich their chances for a good score.

For more information on the ACT, visit www.act.org.