The new college economics: the recession is making it harder for many students to pay for college--and more important than ever to check out all the options.

• Author: Glater, Jonathan D.
• Position: EDUCATION

Diana Jacobs thought her family had a workable plan to pay for college for her 21-year-old twin sons: a combination of savings, income, scholarships, and a modest amount of borrowing. Then her husband lost his job, and the plan fell apart.

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"I have two kids in college, and I want to say 'come home,' but at the same time I want to provide them with a good education," says Jacobs of Salem, Ind.

The Jacobs family did work out a solution: They asked and received more aid from the schools, and each son increased his borrowing to the maximum amount through the federal loan program. Justin, at Hanover College, and Jacob, at Franklin College, both in Indiana, will each graduate with $20,000 of debt, but at least they will be able to finish school.

With unemployment rising as a recession grips the country, financial aid administrators expect to hear from more families like the Jacobses. More students are applying for aid, and more families expect to need student loans. With college endowments down as a result of last year's stock market gyrations, states cutting aid, and fundraising getting harder, college administrators are concerned that they will not have enough aid money to go around.

At the same time, tuition continues to rise. A report from the National Center for Public Policy and Higher Education found that college tuition and fees increased 439 percent from 1982 to 2007, while median family income rose just 147 percent. Student borrowing has more than doubled in the last decade.

"If we go on this way for another 25 years, we won't have an affordable system of higher education," says Patrick M. Callan, president of the center.

"The middle class has been financing it through debt," Callan adds. "The scenario has been that families that have a history of sending kids to college will do whatever it...