How to Scrape Together Cash for College

The recession knocked the traditional model on its head. Figure out who still has the money to help you

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The federal government has also greatly improved GI Bill benefits, so that those who serve their country for a few years can get much of their college costs covered. And the administration has proposed expanding scholarship-for-service programs such as AmeriCorps.

While public schools are raising their prices, many private colleges (many of which are already expensive) are responding by cutting their net prices. Boston College, for example, asked all departments to cut their budgets this year, and it's funneling millions of dollars of savings into financial aid. That means fewer students will have to pay the full $50,000-plus sticker price. Harvard, Stanford, Duke, Williams, and dozens of other elite colleges have pledged to provide free, or nearly free, rides to students from low-income households. And financial aid counselors say that the colleges appear to be keeping their promises. Many private colleges were unusually generous this year, says Al Hoffman, a private counselor in New London, Conn. "I saw many wait-listed students get great awards this year," he said. That's unusual; in the past, wait-listed students often had to pay full price.

Hoffman is rubbing his hands together for the 2010 crop of applicants. "Next year, I believe, will be even better, as the price wars go into full warlike mode," he says. He expects schools to use scholarships to lower the net cost of a college education and make sure every classroom seat is filled. The way to take advantage of the coming price wars, Hoffman advises: Apply to lots of schools, including a few public low-cost colleges, a few "reach" or dream schools, and several private colleges with student bodies whose average grades and test scores are at least slightly below yours. Students can check out their target colleges' admission statistics at U.S. News's premium site or free of charge at the Department of Education's College Navigator website.

Students can also exploit other selling points to pry more scholarship money out of schools. Although Division III schools don't award athletic scholarships, they are often eager to attract athletes and may provide other kinds of aid. Many liberal arts colleges have recently had trouble attracting male applicants, so they might be willing to go a little further for the boys they admit. Many male-dominated engineering schools, on the other hand, might be eager to attract females. And colleges typically want a diverse student body, which may make them more generous to students from distant states.

Many long-established charities have had to reduce their scholarships because the stock market crash wiped out much of their endowments, but a growing number of companies are using college aid as amarketing tool. BabyMint, LittleGrad, Futuretrust, Upromise, and a few other rebate websites will send cash to a college savings account for shoppers who click through their sites to partner retailers. And a marketing company, SAGE Scholars, has persuaded more than 200 private colleges to guarantee "Tuition Rewards" scholarships to students from families who invest or shop with SAGE's business partners.

A time to be humble. Today's harsh financial reality is pushing some expensive schools— publics included—out of reach for a growing number of students. As a result, more students have little choice but to attend cheaper schools. In a mid-2009 survey, nearly three quarters of high school counselors said they'd seen an increase in the number of students forgoing their dream colleges. And 60 percent reported that some of their students were choosing lower-cost public schools (often two-year community colleges) over more expensive privates.

This development is significant but isn't necessarily detrimental to students, since a college's price isn't always an indicator of quality. Many low-cost public colleges do a much better job of shepherding students through to graduation, for example, than do expensive private schools. The University of Texas-Austin graduates a higher percentage of its freshmen than does Baylor University, for example. Students can check out which low-cost schools have high graduation rates at U.S. News's premium site or free of charge at the government's College Navigator.