April 11, 2012 / 5:51 PM / 7 years ago

Getting the most from your financial-aid package

BOSTON (Reuters) - In recent weeks, Eva Chung’s family watched with pride as acceptance letters arrived from all seven of the colleges to which she applied.

A student studies on the campus of San Francisco State University in San Francisco, California June 30, 2009. REUTERS/Robert Galbraith

But some of that initial euphoria has worn off as financial aid award letters followed.

“Reality set in on how much this is going to cost,” said Rosemarie Chung, Eva’s mother. “We did anticipate more help. And, of course, her first choice so far was the least generous.”

Getting into college can be tough. Getting a good aid package can be even tougher. Most families don’t pay the full sticker price, and there are strategies for getting the most generous aid package possible.

“April is the time to ask for more, and do it as soon as possible,” said Barry Sysler, a Pennsylvania-based college and financial aid consultant. “You lose leverage once you’ve accepted enrollment on May 1.”

UNDERSTAND YOUR AWARD

About 82 percent of all first-year students receive some type of financial aid, according to the latest statistics from the U.S. Department of Education. But too often, parents assume that all elements in a financial aid award letter are free money, which rarely, if ever, is the case.

It is important to distinguish between a gift — such as scholarships or grants — and “self-help” that needs to be paid back, which includes loans and work-study.

Felicia Gopaul, a certified financial planner and college consultant, tells families that after they’ve maximized all the grant and scholarship aid, they should use federal loans because they offer competitive, fixed interest rates. These include Stafford loans for students and Parent Loan for Undergraduate Students (PLUS) loans for parents.

Also consider whether a Stafford loan is subsidized or unsubsidized. Interest does not accrue for subsidized loans while you are in school at least half-time or during future deferment periods.

The Free Application for Federal Student Aid’s (FAFSA) calculation of Expected Family Contribution is the best estimate for how much aid you can anticipate, but it is not uncommon to be awarded less.

Also, the Consumer Financial Protection Bureau offers an interactive, online tool called Financial Aid Comparison Shopper. ( here )

ROOM FOR NEGOTIATION

The good news is that financial aid packages — whether they include scholarships, loans or work-study — aren’t necessarily set in stone. Especially for families with special financial hardships, colleges are willing to listen and reconsider.

Nearly all institutions allow families to “appeal” financial aid decisions, some in formal processes but more often on an ad hoc basis. But first, families need to do some homework, and review the results of their FAFSA application, said Joe Bagnoli, dean of admission and financial aid at Grinnell College in Iowa.

“Errors are made, and identifying them can change your package,” he said.

Whenever possible, set up a face-to-face meeting.

“Financial aid officers want to meet with you, that’s their job,” said Don Betterton, who worked in the admissions and financial aid office at Princeton University for 30 years. “Going in person can add that personal touch they need to make a decision in your favor.”

Be sure you’re talking to the right person. Need-based appeals are generally handled by the financial aid office, Betterton said, while the head of admissions often has discretion in his budget to increase merit aid for top candidates.

If a face-to-face meeting is impossible, write a letter rather than calling. Include awards or accomplishments a student has garnered since applying.

If you’re making a need-based appeal based on unforeseen circumstances such as a job loss or sudden medical expenses, provide schools with documentation, including receipts. Consumer debt is almost never considered a hardship.

Asking for a specific amount can also be more persuasive.

“Make it a reasonable offer,” Betterton said. “Two thousand dollars is a reasonable amount to ask for; $20,000 isn’t.”

And don’t be afraid to show one school more generous packages you’ve received from others.

“If the student’s second-choice school has offered a significantly greater amount of aid, explain this in the letter to add some leveraging power,” said Scott Weingold, co-founder of the Ohio-based College Planning Network. “Just be sure not to come off too aggressive - no one likes to be threatened.”

PLAN FOR FOUR YEARS, NOT ONE

Often when a child is off to school for the first time, parents forget to multiply their expected costs by four.

“You want to get reassurances from colleges that you can count on the same generosity all four years of attendance,” said Ron Ramsdell, founder of Minneapolis-based College Aid Consulting Services.

Aida Mirante, director of financial aid at Salve Regina University in Newport, Rhode Island, said students need to know what is required of them to keep their aid, such as maintaining a minimum grade point average or working during school or summer.

In subsequent years, families should always notify institutions if financial circumstances change, such as a second or third child heading off to college.

Under worst-case scenarios, when the money simply isn’t there, parents must be prepared to guide their child toward another school.

“There are many great options out there,” Sysler said. “No college is worth financial ruin.”

(The author is a Reuters contributor. The opinions expressed are her own.)

Editing by Jilian Mincer, Chelsea Emery and John Wallace

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