The only thing harder than getting into college is figuring out how to pay for it.

This month, college students nationwide will receive their financial-aid award letters, the paper that says how much a school and the government will help fund their education.

While a big bottom line is tempting, schools that offer generous financial-aid packages to first-year students frequently wind up costing more long term. Here’s how to pick the best financial-aid package for your college tenure.

Choose the best school for you
  • Break down each offer.
  • Tally the total college cost.
  • Pick the best package.
  • Fill in the gap.

Break down each offer

“A lot of students look at the total at the bottom of their award letters and don’t realize that it includes different types of aid,” says Brenda Dillon, vice president and director of product management at Key Education Resources, the education financing arm of KeyBank N.A., headquartered in Cleveland. “Students need to figure out who’s giving the most free money they won’t have to pay back.”

Financial-aid packages are comprised of three types of awards — nonrepayable gift aid, loans and work-related awards that are predicated on the student holding a certain job while they’re in school or after — none of which come without strings attached.

To discern how much a school is truly offering, first examine:

  • How much in nonrepayable scholarships, grants and fellowships each school offers.
  • Whether each award is renewable for all four years.
  • If it comes with stipulations such as a minimum grade-point average or a course-load requirement.

Once students know their gift aid totals, they can then examine work-related aid, such as federal work-study positions and the federal Teacher Education Assistance for College and Higher Education, or TEACH, grant, an award that provides up to $4,000 for future teachers willing to work in a high-needs area after graduation.

When eyeing work-related aid, Mark Spencer Williams, a former financial aid director at the University of North Carolina at Wilmington, advises students to carefully consider awards like the TEACH grant that require post-grad service.

“If you don’t fulfill the employment requirement after you graduate, awards like that could convert to loans,” says Williams. “That’s not the same thing as free money.”

Tally the total college cost

Once students know how much nonrepayable aid they’re getting (scholarships and grants plus any work-related aid they’ve accepted), it’s time to compare that figure to how much each college really costs.

“Finding out the real, actual costs of college is usually the hardest part for families,” says Jacqueline Moreno, director of college access initiatives for the Illinois Student Assistance Commission. “A typical financial aid award provides a cost of attendance, but it’s just a rough estimate.”

Moreno encourages families to investigate what’s included in the total cost of attendance. Beyond tuition, the figure should factor in funds for books, supplies, room and board, lab and club fees, a laptop (if the school requires one), entertainment money and transportation — not only around campus, but also to home and back a couple of times each semester. Students moving from low-cost areas to high-cost cities will also need to factor in the inflated cost of living. Bankrate’s Cost of living comparison calculator can help you investigate.

Pick the best package

Once you know how much each school really costs and how much free money they’re willing to throw your way, finding out how much you’ll pay out-of-pocket for each school is simply a matter of subtracting. Bankrate’s work sheet helps you do the math.

Be careful, says Lori McGlone, a consultant with Coast to Coast Educational Consulting in Buffalo, N.Y. Choosing the wrong college with the right price tag could leave you in even more debt.

“If you just look at the financial — which college is the least expensive — you’re discounting the social elements of college,” says McGlone. “If a student isn’t happy, they’re going to leave, and usually not all credits will transfer over from one college to the next. It’s a waste of money.”

The National Center for Education Statistics reports that nearly 60 percent of all college students attend more than one institution before graduating. Sixteen percent attend three colleges and 8 percent attend four. While some students save money by attending a low-cost community college before transferring to a pricier four-year institution, those who transfer from one four-year school to the next can easily lose a full semester or even a year’s worth of credits in the process.

McGlone also encourages students to think about their financial situation after college when choosing a school.

“The high school class of 2009 is the biggest class of entering freshmen ever. That means there will be a large class of 2013, all looking for entry-level jobs,” says McGlone. “The better the reputation a school has in terms of graduates getting hired, the better a chance you have of getting work.”

To avoid a costly transfer or post-grad unemployment phase, McGlone recommends students revisit the schools they’ve been accepted to and choose one based on price, alumni job placement and fit instead of solely on cost.

Fill in the gap

After students have settled on a school, the only thing left to do is find financial aid to fill in the gap between the school’s financial-aid offer and what parents and students can actually pay. Before resorting to loans, Reecy Aresty, financial aid consultant and author of “How To Pay For College Without Going Broke,” advises students to ask for more help from the school by filing an appeal.

“I appeal 99 percent of all financial-aid offers,” says Aresty. “You can’t ask a college for more money. You have to ask them for help, possibly a re-evaluation of the financial aid package and, if things have changed, a professional judgment.”

Aresty recommends students write to their aid officers explaining why they need more money and outlining any unique financial circumstances they may face. Instead of directly asking for scholarships, Aresty advises students to ask for items such as a work-study award “so that you can take an active part in paying for your education.” Other negotiable matters may be an upgrade from unsubsidized federal loans to subsidized ones or a clothing allowance for students attending school in climatically different parts of the country.

Those who come up dry after filing an appeal may get a fiscal break through alternative aid programs. For example, the recently increased educational tax credits (which can provide up to a $2,500 credit for families of first-time undergraduate students this year) offer relief when you file your taxes. Also, academic reciprocation agreements allow students who plan to major in a subject that’s not offered in their home state to attend a public school in a member state without paying out-of-state tuition. Of course, students can also reduce their college costs by testing out of introductory courses, landing a full-time staff position with the school they’re attending or establishing residency near their school to avoid out-of-state tuition fees.

If it comes down to a decision between a school of choice with a low-ball aid offer and a less well-fitting institution with a juicy one, McGlone says to investigate scholarships with late deadlines and alternative aid offers, keeping the larger fiscal picture in mind.

“Families need to realize that they really do have financial options,” says McGlone. “They’re the ones in the driver’s seat.”

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