On a rainy Wednesday in December, Tracy Martinez cleared the last of her belongings from her dorm room at California State University, Hayward and hugged her flat-mate goodbye.

Martinez, 18, won't return next semester to her apartment at Pioneer Heights. A mix-up with her financial aid package meant that the grants she thought would cover most of her tuition and lodging fees didn't come through, and her family can't afford to foot the bill to keep Martinez in her on-campus apartment for the remainder of the school year - a bill her father estimates at $5,800.

Families like the Martinezes are getting especially squeezed by soaring tuition fees at California's public colleges. Middle-class families often find their income level is beyond the threshold to qualify for grants - ``free'' money for college. Loans are an option, but many families are leery about taking on the extra debt or - like Tracy's father, Sam - worry that won't be able to afford the additional monthly bill.

In the past two years, student fees at CSU and University of California have climbed 40 percent. Fees at California's two-year community colleges went up 64 percent.

The news next year doesn't appear to be any brighter for college students and families. Gov. Arnold Schwarzenegger on Friday unveiled a proposed budget for next fiscal year that calls for 10 percent increases in undergraduate fees at CSU and UC, and 40 percent at the graduate level.

Community college fees would increase 44 percent.

After that, the governor has proposed linking annual fee increases to gains in per-capita income. Any future increases would be capped at no more than 10 percent a year.

The increases must still be approved by the Legislature and CSU's and UC's governing boards - a process that will take several months.

Schwarzenegger's proposal could also signal more tough times for middle-income families, since he has suggested reducing available financial aid dollars at the university level. Historically, CSU and UC have put one-third of the revenue raised from higher fees back into financial aid programs, but the governor proposed reducing that to 20 percent.

Soaring college fees aren't isolated to California. Tuition at public, four-year universities increased in all 50 states this year, putting the national average for tuition at more than $4,000 a year.

Nationwide, the increases have surpassed the federal rate of inflation and the growth in family income. In response, grant aid offered to needy students reached its highest level ever this year, according to a report by the College Board.

In California and elsewhere, the higher fees can be traced to a souring economy that left states scrambling to make up lost revenue by cutting appropriations for everything from education to social services.

California, dealing with a $38 billion deficit that ultimately led to the recall of Gov. Gray Davis, cut more than $1 billion from public colleges last year. University officials said the cuts left them with no choice except to raise fees.

But the size of the increase and its suddenness - CSU and UC officials voted to raise this year's fees in July, just weeks before the school year began - left many families scrambling to come up with the extra money.

At Cal State, annual student fees are $2,046, up from $1,572 last fall. CSU officials estimates students will pay about $1,195 a year in books and supplies. Students who want to live on campus can add an additional $7,470 for meals and housing costs, and an additional $2,600 a year for miscellaneous personal expenses and transportation costs.

The governor's proposed 10 percent increase would add $205 to the annual base tuition fee.

UC students pay $4,984 in base tuition fees this year, up from $3,429 two years ago. A 10 percent increase would add $498 annually to undergraduate fees.

The California Postsecondary Education Commission estimates that UC students can also expect to pay up to $1,350 in books and supplies, and up to $2,450 in personal expenses and transportation. Room and board charges can run between $7,098 and $10,046 a year.

Fees also soared at California's community colleges, the two-year campuses that are the cheapest option for students pursuing higher education. Community college fees are now $18 per unit, up from $11 per unit last year. Most classes are three or four units, so the increase means that a full-time student, taking the traditional course load of 12 units per semester, would pay $216 in fees, up from $132 last year.

The governor's proposal would take the per-unit fee to $26.

The increases have already given rise to a chorus of concern from policy experts who fear public universities are starting to price themselves out of reach of low- and middle-income families.

``What happened this past year was that many states tried to replace the decline of state appropriations with tuition dollars, and probably students and families suffered disproportionate effects of that,'' said Joni Finney, vice president of the National Center for Public Policy and Higher Education, a San Jose-based think tank. ``If we're going to have another year of really difficult times for higher education, we need at least this year to try all we can do to protect students and families, and that means we've got to start putting the brakes on very high tuition increases.''

Schwarzenegger has proposed doing just that by with his proposed cap, as well as by tying increases to per-capita increases.

``We must end the boom-and-bust cycle of widely fluctuating fees with a predictable, capped-fee policy for college students and their parents,'' Schwarzenegger said in his State of the State address earlier this month.

College officials support the idea of a predictable fee policy, but they wonder how Schwarzenegger's plan will play out in upcoming budget talks.

California's community colleges are already feeling the strain of state budget cuts. System officials have estimated that some 175,000 fewer students have enrolled in community colleges across the state this year, a decline they attribute to fewer course offerings, tuition increases, and cuts in services.

The enrollment decline is especially troubling to educators, because the state's two-year colleges have always been regarded as a higher education ``safety net'' that helps the state meet its promise to provide a space in college for every high school student who wants to attend. With cheap tuition, lower entrance requirements and - usually - lots of course offerings, community colleges are the first-stop on the road to an advanced degree for thousands of students.

Financial aid directors in all the state's public college systems report that requests for aid have increased this year.

Rhonda Johnson, associate director of enrollment services and financial aid at Cal State Hayward, said students this year ``are clamoring'' for on-campus work study jobs to help defer college costs. ``Historically,'' she said, ``it's a challenge for me to give those dollars away.''

Student interest in Perkins loans, a low-interest federal loan, has also increased, she said.

``I'm seeing that students need money now,'' Johnson said. ``And the nice thing about those two loans is they can be given to students who are less needy. We can set some of our own guidelines as a campus, so we do give those to students who come from more middle class families with less need, so it's funding those students who I know are being impacted by the fee increase.''

Cheryl Resh, director of financial aid at UC Berkeley, said she suspects the campus has more students on aid this year, but final numbers aren't available yet.

``I think for sure the economy has really had an effect on us,'' she said.

Even with the increases, officials hasten to add that California's public colleges are among the cheapest in the nation - and financial aid programs help defray the costs for the neediest students.

Community colleges, for instance, offer fee waivers to the neediest students.

UC officials estimate that financial aid programs will cover the fee increase for 40 percent of the system's undergraduates. For the first time this year, UC extended financial aid programs to families with incomes up to $90,000, hoping to help ease the burden on struggling parents.

A report presented in November to CSU trustees found that student fees at the 23-campus system - even with the recent increase - are among the lowest of 15 other comparable public institutions. The costliest comparable state university is Rutgers University in Newark, N.J., where annual tuition is $7,927 a year.

But news they're getting a comparable bargain is cold comfort for Tracy Martinez and her family. Tracy's dad, Sam Martinez, said he can't afford to keep his daughter in on-campus housing, and keep picking up the tab for food, utilities and sundries.

The Martinezes thought they would qualify for financial aid to help cover the cost, but, as it turned out, Tracy's parents' combined income - a little over $70,000 - is too high to allow her to qualify for grants and low-interest deferred loans.

In fact, Sam Martinez said he's having trouble just figuring out how he'll be able to pay the base tuition fee - $2,415 a year - to keep Tracy at Cal State Hayward. The campus financial aid office, sympathetic to Tracy's plight, has given her a one-time grant that will help pay the remainder of this year's fees, but the money may not be available next year.

An $800 scholarship Tracy received will help with cover some of the fees, as well. To cut down on costs, Tracy will move back to her parents' Brentwood home, where the freshman English major will face a two-hour commute each morning and night, via BART and public transit. She'll also have to get a part-time job to help pay the bills.

It isn't how Tracy thought college would be.

``I thought I'd be living on campus, studying here,'' Tracy said earlier Dec. 10 as she sat in her darkened dorm room, just minutes before leaving it for good.

Her father said he's researching loan options to help with the cost of Tracy's future student fees, and he's hoping to find one with a low-enough monthly rate that he can afford.

``It makes me feel like a real loser,'' said Sam Martinez, who makes about $43,000 a year as a system worker at BART. His wife, Patricia, works in the business office of Long's Drugs in Antioch.

``I know I don't make a lot of money,'' Sam Martinez said, ``and for them to say, `Gee, you live too well to qualify for financial aid,' it makes me feel ... Well, it just seems like everybody else gets a little something.''

But education experts say the fees concern them for reasons that move beyond the strain on a family's pocketbook. The issue, they say, becomes one of access to higher education.

A study by Harvard economist Susan Dynarski found that every $1,000 increase in college tuition means 4 percent fewer of the nation's 18 to 24 year olds will enroll in college.

The access issue in California has been compounded by state budget cuts that could force CSU and UC campuses to restrict enrollment of new freshmen next year because they won't have enough money to accommodate everyone who wants to enroll.

Schwarzenegger has proposed further limiting enrollments by shuffling 10 percent of the first-time freshmen that would normally qualify for CSU and UC campuses to community colleges.

Community college transfer students have already been affected. UC this year said it couldn't even consider applications from some 1,500 students who hoped to transfer because the campuses didn't have enough money.

Some UC regents fear the public has been further confused about UC admission standards by a report issued in October that revealed that 386 students were admitted to UC Berkeley last year with SAT scores below 1000, while hundreds with scores above 1400 were denied.

UC Berkeley officials said the report was flawed, and didn't adequately represent the campuses' comprehensive review admissions policy, which takes personal achievement into account along with academic prowess. David L. Kirp, public policy professor at UC Berkeley, said the report distracts the public from the real challenges facing higher education, specifically concerns about access and soaring fees.

``What families will notice is it's going to cost more to send their kids to school,'' said Kirp, whose book, ``Shakespeare, Einstein and the Bottom Line'' traces how American universities are reinventing themselves in the face of competitive pressure.

``My strong suspicion is more undergrads are working, and they're working longer hours and it's taking them longer to graduate. Those would be the predictable impacts of money worries,'' he said.

In an unusual move, federal lawmakers have now stepped into the fray, introducing bills intended to stop the skyrocketing cost of college.

``This is a national crisis,'' said Rep. Howard ``Buck'' McKeon, R-Santa Clarita, who has introduced a bill that would prevent colleges that raise their prices too high from participating in some federal student-aid programs. ``If we don't do something about it, 2 million young people over the next decade are not going to be able to go to college.''

McKeon's bill hasn't been popular with some educators. The American Council on Education is against the bill, saying it unfairly imposes price controls on colleges and, further, by limiting participation in aid programs, would harm some of the very students it purports to help.

But McKeon said he's watched tuition go up for years, and he hasn't seen any significant steps to stop it.

``It looks like the only way to do it is put some teeth in a bill that will require schools to keep their costs down,'' he said.

Democrats in Washington have also set their sights on rising costs.

Senators Hilary Rodham Clinton of New York and Edward Kennedy of Massachusetts co-sponsored a bill in October that would punish states that reduce spending on higher education.

Under the proposal, students who live in states that reduce spending on colleges by more than 10 percent in one year would be ineligible for increases in federal financial aid and tax relief the plan would create, according to an article in the Chronicle for Higher Education.

``What we're seeing is a disinvestment in public higher education by the states,'' Clinton told the Chronicle.

Finney, the policy expert, said it's rare for federal lawmakers to become involved in states' tuition struggles.

Ultimately, she thinks both bills are unworkable - ``We've got to have some kind of flexibility and freedom here,'' she said - but it's noteworthy that the feds are taking an interest.

``This is an issue that's on the minds of people,'' Finney said, ``and it really reflects their public concerns.''

Finney said high tuition costs are the result of a ``boom and bust'' approach to higher education funding. In economic good times, states pour dollars into public colleges. When the economy goes sour, states cut those appropriations and colleges raise fees to make up the costs.

In fact, this year's increases were the first in California in eight years - and tuition even was reduced slightly over the past decade as the state appropriated more money to higher education.

As much as families may be struggling with the higher tuition fees, students still pay a fraction of the true cost of their education.

The California Postsecondary Education Commission estimates that the state and taxpayers provide about two-thirds of the support for the cost of education at UC and about 74 percent of the cost at CSU. For community colleges, state general fund revenue supports about 48 percent of the cost of education, while local property tax revenues provide the remaining 42 percent.

Sam Martinez said the prospect that tuition will go up again worries him greatly - especially since Tracy's younger sister, 15-year-old Marti, will soon be shopping around for colleges.

The family has talked about sending Tracy to Diablo Valley College, a Pleasant Hill community college closer to home that would be cheaper than Cal State Hayward.

But Tracy, who wants to be a writer, said she wants to stay at a four-year university. She can recite the dollars-and-cents benefits of a college degree - a better job, higher salary, increased standard of living.

But she also says it's important to her for other reasons: ``I want that stuff, too,'' she said, ``but I also want to learn.''