PersonalFinance: How to afford the costs of college

- Linda Stern is a freelance writer. Any opinions in the column are hers. You can follow Linda Stern's financial notes on Twitter at www.twitter.com/lindastern

By Linda Stern

WASHINGTON (Reuters) - It's time to pay the bursar. Back in the spring, high school seniors were happy to get those college acceptance letters. But now the bills for that first semester are coming due -- and they're big.

It now takes an average of $35,636 to cover tuition, fees, room and board at a private college, and over $15,000 for an in-state public school, according to the College Board. And that doesn't even count pizzas and iPads. You'll spend more than $50,000 a year to send your child to the most expensive schools like George Washington University and Kenyon College.

That's more than most families can reasonably save, even with a 529 college savings plan and the best of intentions. And it's certainly more than most college students can earn in their spare time. So much for the "work your way through school" parable that parents like to tell.

But there are some other sources of money out there, and there's little doubt that a college degree is a worthwhile investment. Here's how to squish those bills down to size and find the cash you need to pay them.

-- Be very open minded about your college path. You can save significant amounts of money by considering alternative approaches to college. Start at a cheap school or community college and then transfer to the in-state flagship for junior and senior year. Pile up advanced placement credits in high school and summer school, and cut the number of full semesters you need to pay for. Take a gap year between high school and college, and work your fingers to the bone, earning and keeping as much as possible. Go to the school that wants to pay you to go there, and save your money for graduate school. That's really going to cost you.

-- Apply for financial aid, even if you think you won't qualify. You may be surprised at how much your family can earn and still qualify for financial aid. Fill out the Free Application for Federal Student Aid (FAFSA)(www.fafsa.ed.gov). If you're planning on a private school, fill out the College Board's profile form (here) too.

-- Search for scholarships. There are thousands of them listed on FastWeb.com (www.fastweb.com), but don't stop there. Scholarships from the local PTA or boosters club might be easier to get than the big national awards. Look for scholarships awarded by the professional association of your intended major.

-- Take Federal Stafford loans. If there's a gap between what the school charges and what the FAFSA says your family can afford to pay, the government will fill it with subsidized Stafford loans. Starting July 1, the rate on those loans drops to 4.5 percent, and that's a fixed rate for the life of the loan. The Feds will pick up all of your interest until you graduate. Starting with the upcoming school year, all of those loans will come directly from the Department of Education through the direct loan program. (here)

-- Hit up your relatives. Grandparents can pay money directly to colleges without running over federal tax-free gift limits. Parents can take out a federal Parents Loan for Undergraduate Students (PLUS) for as much as is needed; they are also available through the Department of Education's direct lending Website.

-- Borrow against the house, if you can. Not everyone has enough home equity to secure a loan, but right now interest rates on home equity lines of credit are running around 5 percent or less. If you have an old line of credit, it may be charging less than 3 percent interest. That's better than the rate on most education loans, and a reasonable way to finance a big, important expense.

-- Take a private loan. This is a last-ditch measure, because piling on more debt than the Feds will give you (a total of $31,000 for four years of school) will crimp your post-college style. With big private loans you won't be able to spend that year traveling after school or volunteering for some low-paying good works. You'll have to hurry into a big-salary job to start paying back the banks.

If you still want to do this -- say you're an engineering major and aren't worried about the job market -- comparison shop at SimpleTuition.com and at your local credit union. Get your parents to co-sign for the best possible rate.

-- Pull out all the other stops. Hold yard sales. Wait tables. Tutor high school students. Consider -- after all, tough times call for drastic measures -- skipping the spring break trip and using that money to buy books in the fall.

(editing by Gunna Dickson)