Everyone knows college tuition costs have been soaring. The published prices alone, however, don't provide a full picture of what most students will actually pay, since nearly 60 percent of students receive grants and scholarships. That makes the net cost of college considerably below the sticker price.
The average sticker price of in-state tuition at a public university is $8,700 per year while the net price is just $2,900 (out-of-state students pay considerably more). For a private school, the discount is even greater: Average tuition is $29,000 per year, but the net price paid is $13,400, according to the College Board. (Keep in mind these numbers don't include room and board and other annual expenses, which can push costs over $40,000 at a private university.)
Bottom line: The obvious is true — more financial aid you receive, the more affordable college becomes.
Getting the best aid package depends on your family's financial picture and saving strategy, your academic profile, and properly filling out the forms required by both the government and your school. You can get an estimate of your expected aid by plugging the name of the school and some information about your family into this from the Department of Education.
Follow these steps to make sure you get the maximum aid possible:
Keep college savings out of the child's name. When it comes to considering a family's ability to pay for college, federal formulas assess children's assets at four times the rate at which they assess parents' assets. So rather than opening a savings account in your child's name for college savings, set aside money in an account that you control. In most cases, the best way to save for college is in a 529 account, which grows tax free and can offer state benefits, in your name with your child named as a beneficiary.
If you have a few years before your children start college, meet with an accountant to see if there are any other financial moves that can help you get more aid, such as putting additional assets into sheltered retirement accounts. "You obviously don't want to hide assets, but there are strategies that can put your financial picture in a more favorable light," says Kim Nauer, education project director at The New School's Center for New York City Affairs and co-author of the e-book FAFSA: The How-To Guide for High School Students (and the Adults Who Help Them).
Fill out the FAFSA as early as possible. The deadlines to fill out the Free Application for Federal Student Aid (FAFSA) range from early January through March — the form usually becomes available right after January 1 each year. But getting yours in first or as early as possible can boost your chances of getting more aid, since some schools dole out aid based on the date the application is received.
Families are finally getting the message. According to Sallie Mae, FAFSA completion jumped from only 72 percent in 2010 to 82 percent in 2013, with middle-income families making up a substantial portion of the increase.
The FAFSA is also used by the federal government to determine qualification for both student and parent federal loans, and institutions sometimes use it to determine eligibility for merit aid.
In addition, roughly 300 private and more selective schools ask for a detailed CSS profile, which usually requires a filing fee and is used to determine the school's own aid distribution. The CSS profile can be due earlier than the FAFSA, particularly if your child applies as an early action or early decision candidate — so the time you spend compiling your financial data and filling out the CSS will inevitably help when you complete the FAFSA. Make sure to set aside a chunk of time for completing these forms or ask for help if you need it. The process can be cumbersome, especially if it's your first time through.
Know that financial aid officers are on your side. It's the job of your college's financial aid office to help students and parents navigate the aid process. If you've got questions about the FAFSA or about the process for getting an aid award, don't hesitate to reach out to the aid office for answers — but do it sooner rather than later.
It can be helpful to let them know about unique financial situations that may not be picked up by the FAFSA. If you're supporting an aging parent or have student loans of your own, for example, explaining those circumstances could result in more aid. "Try to be as concrete as you can when describing these issues, and provide documentation," says Kathy Ruby, a college finance consultant with admissions firm College Coach.
Remember that it's OK to appeal. While federal aid dollars are based on a pretty rigid formula, the schools have more wiggle room with the money they award. If there has been a change in circumstance since your child's application, such as a job loss or a medical condition, sharing that information with the financial aid office could change your award.
Once you've received multiple aid offers, you can use them to get colleges competing for a student. Many colleges will match a competitor's offer to get a student to attend.
Understand the aid you're offered. When comparing aid packages, be sure to carefully evaluate your award letter, which typically arrives in early April. Many schools include student loan offers in their award letters, but remember that loans do not actually reduce the cost of college. After factoring in interest rates, they can often increase the overall cost of a particular school. (Remember, too, that you must fill out the FAFSA not just once but every year you're in school.)
Don't write off merit aid. This type of aid can be more competitive than grants and need-based aid, but it's still worth going after to further reduce costs. In addition to scholarships offered by the college, look for local academic scholarships offered by your school or by community organizations. Note that the FAFSA is required to be eligible for merit aid from your school.
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