A rule of thumb is to invest no money in the stock market that will be needed within five years. So by 17, it's considered risky to subject college money to the stock market.
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Many parents look at meager savings and worry how they will pay for school. But some middle- and low-income families should be less concerned than they are: Many will be eligible for financial aid.
Aid could include low-interest loans, campus jobs and scholarships that come in many shapes and sizes. Also available are grants—free money that does not have to be repaid. Qualifying is not contingent on grades or SAT or ACT scores. The grants are given to families by colleges based on the parents' and students' income, savings and other assets. At an Ivy League school, a family with an income of $180,000 might qualify, while at a public university incomes over $70,000 might not.
Many private high school or elementary schools also will grant scholarships to families in need or will allow people to defer payments.
Still, at both the college and private-school level, the economic downturn is eroding some opportunities for aid.
The plunging stock market has hurt college endowments and donations, making it more difficult for schools to deliver the aid they would have during better times. Consequently, families with students headed toward college next fall need to apply quickly for aid so they are in front of the line.
"There is aid available, and people should go after it," said Kalman Chany, a New York financial aid consultant and author of "Paying for College Without Going Broke."
To apply for aid, families must complete a form known as the FAFSA and submit it to colleges along with their tax return. Private colleges might want another form, the Profile. College financial aid offices will tell you what they require.
Even people who qualify for grants usually must come up with additional money of their own for college. But combined with college savings, low-interest federal and state student loans, as well as work-study jobs on campus, frugal families can often make the situation work.