Local Scholarships and Other Tips For Paying College Tuition

In villages like Nyack and Piermont—where high school graduation rates are stellar and college attendance often seems mandatory—the rising cost of tuition is a perennial dilemma.

These days, one year at a prominent four-year university can cost almost $50,000— and this does not include the extra costs of housing, transportation and other living expenses. There are, of course, less expensive options at colleges that also offer an excellent education; but most four-year colleges cost at least $10,000 per year, and many more are in the $20,000 to $30,000 range. For families in the Rockland region, saving college money from the time children are born is not uncommon.

Luckily, there is financial help—and sometimes, it's local. To help honor the memories of two courageous police officers, The O'Grady Brown Memorial Scholarship Fund awards scholarships to Rockland students for to help them eventually pursue careers in law enforcement related fields.

The scholarship's nameskes are Nyack Police Sergeant Edward J. O'Grady Jr. and Nyack Police Officer Waverly "Chip" Brown; both men were slain in the line of duty during the fall of 1981.

This year, seven students received the scholarship. An award of $1,000 each was presented to Jario Gonzalez, Robert Leonard, Joseph Maniscalco, Michael Marchman, Bridget Nova, Frank Voce and Joseph Williamson. These students might know how lucky they are with the continuing rising tuition costs in New York.

But what else can families do in addition to seeking out local scholarships? Now, loans and grants are more important than ever. In the past five years, the average cost of in-state tuition and fees at public colleges has jumped 35 percent after adjustment for inflation, according to the College Board. In the past 25 years, the average cost of tuition and fees has risen faster than personal income, consumer prices and even health insurance. Over the past two years, average tuition, room and board in New York has risen 12 percent. But in time when even entry-level jobs often require a bachelor's degree, hardly anyone disputes the importance of a college education.

But fret not: there are two main types of funding for college—loans and grants. Loans are borrowed money that must be paid back, with interest, although the interest rates for student loans are lower than for some other types of loans. College students today are graduating already in debt up to $200,000 from these loans.

Grants, on the other hand, are gifts of money that do not have to be paid back—but students often must fulfill certain obligations, such as maintaining a certain grade point average or demonstrating family need, in order to qualify. Grants are funds that are earned or competed for, and they may be based on the student's academic, athletic, or civic performance or on some other condition that has been met by the student or family.

Identifying and accessing these funds can be confusing, and even discouraging, for families when they encounter the application forms. Most colleges, secondary schools, and other organizations have offices to help students learn about funding resources. Search for grants and scholarships that may apply to you or your college-bound children here.

And there's help beyond loans, grants and scholarships. Thankfully, Washington has delivered some valuable tax breaks over the past few years to parents trying to pay tuition bills. Here's a rundown of what's available. For 2010 you can deduct up to $4,000 of college tuition and fees paid for you, your spouse or any other person claimed as a dependent on your return. This is an "above-the-line" deduction, which means you don't have to itemize in order to take advantage of this. However, the $4,000 figure is the annual maximum, regardless of how many students may be in your family. This is the criteria:

• You don't get the full deduction if you are unmarried with modified adjusted gross income above $65,000, or a joint filer with modified AGI above $130,000. However, if your modified AGI is between $65,001 and $80,000 for singles or between $130,001 and $160,000 for joint filers, you are entitled to a reduced deduction of up to $2,000
• No deduction can be claimed for expenses paid with earnings from a Section 529 plan or withdrawals from a Coverdell Education Savings Account. Also, you can't claim the deduction in the same year you claim the American Opportunity or Lifetime Learning tax credit for the same student. (This deduction expired at the end of 2009, but it will probably be retroactively reinstated for 2010) 

With Coverdell Education Savings Accounts (CESAs), you can contribute up to $2,000 per year, which makes CESAs a very wise savings vehicle. This is especially true if you have several children (or grandchildren), since you can contribute $2,000 annually to separate CESAs set up for each child (or grandchild). Annual contributions are allowed up until the account beneficiary (the college-bound child) turns 18. If you are unmarried, your ability to make CESA contributions is phased out between adjusted gross income of $95,000 and $110,000. For joint filers, the phase-out range is between $190,000 and $220,000.

CESA earnings build up tax-free. Then the money can be withdrawn, also tax-free to pay the account beneficiary's college expenses. CESA contributions are nondeductible, but the tax-free withdrawal privilege makes up for that. If the beneficiary doesn't attend college or doesn't incur enough expenses to exhaust his or her account, the balance can be rolled over tax-free into another family member's CESA. You can also take tax-free CESA payouts to cover the account beneficiary's elementary and secondary school. Eligible expenses include tuition and fees to attend private and religious schools, room, board, uniforms and transportation.

You can also withdraw CESA money tax-free to pay costs to attend public K-12 schools. Eligible expenses include books and supplies; academic tutoring; computers, peripheral equipment and software; and even Internet access charges. Another benefit, you have until April 15 of the following year to make your CESA contribution for the tax year in question. For example, you can make your 2010 CESA contribution as late as April 15, 2011.