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Let's face it: These days, getting into a good college is the easy part. It's paying for college that's proving difficult, especially for students from low- to middle-income families. And despite efforts by wealthy universities to improve their financial-aid packages for low- and middle-income students, many students are still forced to take out huge loans to pay for school.  

Today, the average annual tuition (including fees, room and board) at a four-year private college or university is $32,307. That's up 77 percent from $18,312 in 1986. For public colleges and universities, the average total costs are now $24,044, up 219.4 percent from 1986 when the average tuition for public universities was $7,528, according to the College Board.

"There are a variety of factors that can cause tuition to go up," says Jean McDonald Rash, university director of financial aid at Rutgers University. "Most public schools rely on investment from state government in order to keep the tuition and other costs down for students. When the budget situation in states becomes dire and higher education is cut across the board, essentially those costs are pushed on to families."  

So how are most people paying the bill? With loans. Big ones.

"For many low-income families, paying for school is a big challenge because, often, home-equity loans are not available. More and more families are relying on private borrowing," says Rash.

For the 2003--2004 school year, the latest year for which data is available, the average college loan for a Black student was $19,800. For Asian students, the average was $17,900, while the average Latino borrowed $17,000, according to the National Center for Educational Statistics. And these numbers are expected to rise dramatically as the price of higher education continues to soar.

Financial advisers warn parents and students to explore all of their financial options before drowning themselves in debt. Here are a few tips on how to keep your head above water. 

No. 1: Plan

Financial planning is vital at the onset. Figuring out how much you can contribute toward paying for school will give you a clear picture of how much financial aid you will need and also may help you decide which school best suits your educational needs but is within your budget.

"Knowing how much your school costs is very important … if you are at a lower-cost public school versus a higher-cost private, that public school is going to save you a lot more for your money, in terms of offsetting your cost," says Rash.

So how do you calculate your family contribution?

The estimated family contribution is based on the income and assets of the student and his or her family, the number of people in the household and the number of children in college. A family needs to take the total cost of the school and subtract what the federal government says you should be able to contribute; the difference is your need.

No. 2: Apply for Scholarships

There are many scholarships that are specifically for people from traditionally underrepresented groups. Financial advisers say applying for scholarships should be the first step applicants make.

"Look for the financial aid that does not have to be repaid, like scholarships and grants," says Beth Guerard, a Sallie Mae spokesperson.

Scholarships usually go fast; remember to apply as early as possible. If you are just getting started, look at historically Black colleges and universities' web sites and also professional organizations, advises Rash.   

"If a student can take the time to investigate scholarships and submit them, a lot of it is essay writing. You can actually benefit from scholarships," says Rash.

No. 3:  Look at Federal Grants and Programs

More than 13 million students apply for tuition-assistance programs annually, either through scholarships or school programs; unfortunately, nearly 2 million of these applicants miss out on free federal dollars because they fail to submit a Free Application for Federal Student Aid (FAFSA), according to Sallie Mae. Many of those who miss out on free federal dollars are often people from traditionally underrepresented groups.

"A recent Sallie Mae study showed that 10 percent of families are aware of FAFSA but don't intend to complete one," and this is a grave mistake, warns Guerard. "Don't leave any money on the table this year."

The Pell Grant is the most common form of federal aid for low-income students. Families earning less than $15,000 a year automatically qualify for the maximum aid of $4,050. In FY 2006, more than 5 million students received a Pell Grant scholarship. Of these students, 74 percent had family incomes below $30,000.

There are also a number of scholarships designed to raise the number of students studying key subjects. For example, The National Science and Mathematics Access to Retain Talent Grant (National SMART Grant) targets third- and fourth-year undergraduate students studying physical, life or computer sciences, mathematics, technology, engineering, or a critical foreign language.

For more information on federal assistance, visit Student Aid on the Web. Click here to find out about targeted grants.

Like scholarships, the earlier you apply for federal financial aid, the better. The deadline for FAFSA is usually Feb. 15.

No. 4: Use School Programs

Colleges and universities have a number of programs for students from low- to middle-income families. Consider any tuition-assistance plans your school may offer, advises Guerard.

"This is an interest-free option that enables families to spread out their payments to the school over the course of the 10-month school year. Families can use it to cover some, or all, of their education expenses," says Guerard.  

Also, programs such as Federal Work-Study provide part-time work at school for eligible students to help pay for education costs. Remember, every little bit helps.

"Every school is different," says Rash. "But every state has aid programs through schools that people from low-income families can use."

No. 5: Don't Rule Out Student Loans--But Be Smart

Socioeconomic status affects a student's college-loan debt. But this debt can be minimized if you do your homework.

"Explore federal student loans. They generally have below-market interest rates and more flexible repayment options. Even if you think you are not eligible for federal money, you can't be sure until you try," says Guerard.

Last July, the interest rate on subsidized Stafford loans, which are federally regulated need-based loans, dropped to a 6 percent fixed rate. And although both the subsidized and unsubsidized Federal Stafford loans have caps for how much money is dolled out--$3,500 a year for dependent freshmen, $4,500 for sophomores, and $5,500 for junior and seniors--the drop in interest rates means significant savings for students.

More Financial Literacy >>

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