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Four ways to save big on the cost of college

As the financial aid season heats up, a few moves can save families thousands of dollars.

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For families facing college bills either in the near future or several years down the line, the picture isn't pretty. Grants have become a shrinking slice of the student-aid pie, boosting the importance of cost containment. In addition, college costs keep rising faster than inflation. Students at four-year public colleges this year will pay an average of $12,127 to cover tuition, fees, and room and board - up 6.6 percent from last year, according to the College Board. The average four-year private college now charges more than $29,000 for a year on campus.

What's more, congressional budget cuts mean variable-rate federal loans, with rates as low as 4.7 percent, will lock in July 1 at higher fixed rates. Stafford loans, the most popular of all, will be fixed at 6.8 percent while Parent Loans for Undergraduate Students (PLUS) will be fixed at 8.5 percent.

But don't despair. As the financial aid season heats up this month, a few savvy moves can save families thousands of dollars, say experts.

First step for those with college-age children: Do your taxes now. Then use the tax return to fill out the Free Application for Federal Student Aid (FAFSA), which schools use as a basis for many award decisions. Since decisions often occur on a first-come, first-served basis, early-bird filers have a better chance of getting the financial-aid worm. After that, consider these four strategies to keep costs down:

1. Scholarships: apply, apply, apply

Brett Taylor of Oil City, Pa., has two sisters attending public universities, but he's spending less than they are to attend Allegheny College, where the price tag is $33,500. The secret: three scholarships worth a total of $11,000.

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