By Linda Stern
WASHINGTON, April 17 This is the time of year
when high school seniors start to calm down and their parents
start to get anxious. The students have received those coveted
college acceptance letters, so they know they are going to go
somewhere. But how will Mom and Dad scrape up the money to pay
As has been widely reported, the numbers are significant.
Some schools have breached the $60,000 mark for one year of
tuition and fees. The interest rates on federal student loans
are slated to double from 3.4 percent to 6.8 percent come July
1, unless Congress acts before then. And independent financial
aid advisers like Fred Amrein in Wynnewood, Pennsylvania, say
they see schools increasingly optimizing their funds to drive
the most money to the students they want the most.
Put bluntly, a student with great SAT scores and a
willingness to forego the Ivy League for a second or third tier
school, will get plenty of financial help in the form of merit
aid from a school that really wants her. A student who has
clawed his way into a school that was a stretch for him
shouldn't expect to get merit aid, and may even find his
need-based aid capped at a level too low to meet that need.
But families have more tools and power at their disposal
than they think. Here's how parents can handle the haggle month
of April, when everyone is playing "Let's Make A Deal" with your
-- First, calm yourself. There is no one school that will
make or break your child's life. Your child can take time off
before going to school, start at a cheap community college and
transfer to State U. They can stretch four years into five and
work in between, or give up their summers to school and shave a
semester or two off of their program. They can - steel yourself
- live at home and commute to school. All of these strategies
will save money, and none of them will ruin your child's future.
Some may even improve that future.
-- Compare offers. The Consumer Financial Protection Bureau
has a cost comparison tool on its website ()
that allows families to compare bottom line after-aid costs of
different schools. Start by comparing the bottom line cost of
the degree, not just the first year, says Ellen Freiburger, a
Manhattan Beach, California, financial planner.
-- Look for special circumstances. Need-based financial aid
is typically formula-based. Some colleges will negotiate if you
show them a better package from a competitive school. But most
will not, says Amrein. He discourages his clients from appealing
their aid awards unless they have financial pressures that don't
show up on their aid forms. That could include unemployment,
high health care expenses, or spending associated with taking
care of an aging parent. If you have special circumstances,
write a very brief and numbers-driven letter to the financial
aid office at the colleges your child is considering, he said.
The shorter and more direct, the better.
-- Do a cash flow analysis. Figure out what it will cost for
all of your children to get their degrees, and then make a plan
for where you will get that money. In the years when you have
more than one child in college at once, you'll get more aid. If
you have enough cash to pay for the early years but not the late
ones, be strategic. One way to do that is to use up all 529 plan
savings and other college-aimed savings early, deferring loans
until they are absolutely necessary.
But Amrein tells clients that if they expect to have to
borrow a lot in the out years, they should start by having their
child take some federal Stafford loans early. They are the best
loans, typically at the lowest rates, and that strategy will
protect parents from having to resort to private loans or borrow
too much under their own names in the out years.
-- Pick and choose. Just because a school gives you a
comprehensive financial aid package that includes grants, loans
and an on campus job doesn't mean you have to take all of it.
You can take the grants and the job, and leave the loans,
pulling money from other sources, including family savings, home
equity and Grandma. Or you can take some of the loans and the
grants, and have the student look for higher-paying work off
campus. If your student has her heart set on one particular
school, you could even - ahem - ask her to skip the costly
spring break trip and earn extra money during academic
vacations. After all, drastic times call for drastic measures.