News Scrapbook 1986

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Thursday, August 28, 1986

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from a parent to a child will be disal- lowed under pending tax laws. It's possible that parents will still be able to purchase zero coupons in their children's names and have them taxed at their children's (pre- sumably lower) rates. But experts disagreE> on how tax revision would treat children's zero bonds. In any case, using privately pur- chased zero coupon bonds, the young- ster i$ not bound to attend any par- ticular college or college at all. He or she receives the funds no-strings- attached when the bonds mature. But if college costs do shoot up to alarming heights, parents investing on their own would not be getting the same kind of benefit as those buying into a Duquesne-modeled plan. Some educators however, are not in favor of plan committing a child to a particular college or university; nor do they like the idea that their admissions offices might feel com- pelled to accept an unqualified stu- dent whose parents have already paid. Richard Whitehill, director of psy- chological and counseling services at UCSD, said that perhaps if a number of institutions. offenng a wide choice in education, were to offer such a plan together, it would be more fea- sible. This may become a reality in some states, says Richard Anderson, a Col- umbia University professor who also

serves as a project director for the National Center for Post-Secondary Governance and Finance, a federally funded research center in New York. Anderson has been working with several states to devise tmllon pre- payment plans that would offer col- lege-ready students the choice of state colleges and universities as

well as some private colleges. Michi- gan is the closest to adopting such a plan. While bothered by the idea of lock- mg a student mto a college, he con- ceded that economically, t-he private plans, such]ai the one at Duquesne, ee COt l.EGE on Pa2e C-15

Where to turn for help A clear, basic guide on federal aid is the booklet, "The Student Guide Five Federal Financial • "Chronicle Student Aid Annu- al," published by Chronicle Gui- dance Publications Inc., Aurora Street Extension, P.O. Box 1190, Moravia, N.Y. 13118-1190.

investment of $5,802. Even if their income ro e proportionately, it ·ould still be a hedi::e against infla- llon. And since 1t is a commodity that 1s bemg consumed, not bartered or resold, 1l is unlikely the parents could be la ed for the gain of $87,000 or . o, Fleming 1d. (The amounts a parent need mvest will, of course, vary with the current age of the child. Th older the child, the greater th initial investment required.) t'leming's plan already has 600 takers at Duquesne and has been adopted by five other mall private college. , all of which face a shrink- mg pool of applicants because the teen-age population is declining. However, some economists and educators have serious questions about the wirdom of buying into such a plan. In the first place, a youngster is, e enlially, b mg committed to a particular college at a very young ge. If the youngster doesn't want to attend Duquesne when the tfme com ·, the parents can get back their initial investment, but without the in- terest. This amounts to a hefty penal- ly mdeed. The student can, however, transfer to another college after the first year and Duquesne will advance the money to the new school at Du-

Aid Programs '86-'87," free for the asking from the Consumer Infor- mation Center, Dept. DEA-86, Pueblo, CO 81009. Colleges can provide informa- t10n on their own scholarships and grants In addition, there are many volumes that have been written listing scholarships - general as well as specialized and regional scholarships. Look in school or public libraries or check with high school counselors. Herb Whyte, director of finan- cial aid at the University of San Diego, mentions several that are helpful. quesne's tuition rate or at the new school's rate - whichever is lower. If the youngster is not accepted at Duquesne, the college will release enough to pay for 75 percent of his or her tuition at a "remedial" institu- t10n such as a community college until qualified to enter Duquesne. And if the youngster flunks out of Duquesne (or other colleges in the plan) the parents get nothing back.

• "As and Bs of Academic Scholarships," Seventh Edition, by Robert Leider and Dale McClel- land, published by Octameron As- sociates, P.O. Box 3437, Alexan- dria, Va. 22302. • "Your Own Financial Aid Factory," by Robert Leider and also published by Octameron. • "How to Put Your Children Through College Without Going Broke," published by Research In- stitute of America, 589 Fifth Ave., New York, NY 10017. Flunk-outs and dropouts are, of course, what make it possible for the university to consider offering a $93,000 education at such a cut rate. It is parallel to a life insurance oper- ation. Just how advantageous such a plan is to parents will, of course, depend in part on the rate of inflation. Many traditional investment pro- grams designed to transfer funds

San Diego, CA (San Diego Co.) San Diego Union (Cir. D. 217 ,089) (Cir. s. 341,840)

AUG 2 81986

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Thursday, August 28, 1986

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her resources) she is receiving: • APell Grant of $565. • A Federal Supplementary Edu- cational Opportunity Grant of $1,600. • A Guaranteed Student Loan of $2,500. • A National Direct Student Loan of $1,150. • A College Work-Study Program for $1,500. • A University of San Diego Schol- arship of $1,000. • AUniversity of San Diego Grant for $2,900. The first five sources of Cindi's funds are from federal government programs. The size of Pell grants are based on a formula that takes into account parents' means, amounts of o

funding for which the student is e!igi- ble, enrollment status and cost of ed- Each college that qualifies is allot- ed some funds from the federal gov- ernment for the supplementary grants. The award amounts vary de- pending on how much money is available at the individual college. Funds for guaranteed student loans come from lending institutions. Funds for direct student loans are from the government but, like sup- plementary grant funds, are distrib- uted by the individual campuses. Eighty percent of the work-study salaries come from the government. The jobs are predominantly on cam- pus, but sometimes at nearby non- ucation.

Cindi's University of San Diego Scholarship is based on her academic performance, the USD grant on need. Other scholarships available at USD include two sizable ones - the Jeanne Lawrence Scholarship for an outstanding minority woman student and the Bishop Maher Catholic Lead- Whyte, the USD director of student financial aid, said that reports of huge numbers of scholarships going begging because no one knows about them are largely exaggerated. "There are a lot of scholarships that are so specialized, they apply to practically nobody," he said. Nevertheless, he said, there are ership Scholarship.

find an amazing number of scholar- ships. Meanwhile, as tax laws change and budgets tighten, there is much speculation on what will happen to funding for students of the future. As always, changes are in the wind. Students this year are affected by new federal legislation designed to establish better verification of stu- dents needs in the awarding of gov- ernment grants and loans. Whyte said the federal govern- ment is also planning to tighten its rules on determining when students can declare independent status, which makes them eligible for awards when, as dependents, their

parents' incomes would make them ineligible. Whyte noted that students in an area like Southern California, where real estate is relatively expensive and the parents' home equity might be proportionately high, can be at a disadvantage in getting federal school aid. A higher home equity raises the net worth and can hurt eligibility, he explained. Experts conclude that the highly motivated student with good grades and energy can somehow find a way to go to many colleges, even private colleges. But it requires diligent re- search.

C-Ootinued Crom Page C-14 do provide parents with a significant discount on conege educat10n. In the meantime college costs are already astronon ical - annual tui- tion and room-and-board and fees at some private colleges have topped $18,000. Cindi's financial package 1s fairly typical of one at private colleges, where enterprising students can cut theJr personal co ts dowr o corre- spond to tho e at pubhc institutions. A student at a state institution would be assembling pretty much the same kind of package. To fulfill her need for $11,222 (the university's basic costs of $13,320 less

some very energetic, entrepreneurial vrofit service or anizations.___ students who have done the work to