The complexity of paying for college
The complexity of paying for college

Paying for college isn’t as simple as it used to be. To meet myriad costs from tuition and student fees to room and board, college-bound freshmen and their families increasingly have turned to financial aid in the form of grants, scholarships and loan products that have become complex in recent years.

Between the 2006-2007 and 2010-2011 academic years, the percentage of students receiving some form of financial aid at four-year colleges grew from 75 percent to 85 percent, according to the National Center for Education Statistics. But while parents and students may think an offer of financial aid is the ticket to higher education, experts caution that such letters often can be confusing and misleading.

“It’s really a case of buyer beware for both parents and students,” says Andy Lockwood, a Plainview, N.Y., college finance consultant.

At the end of the day, colleges are businesses, whether they’re public or private, for profit or not. “They want to get you to come for the most money they can get out of you,” Lockwood says.

But the key to keeping your education costs down is to do your homework after receiving the financial aid offer letter and not get carried away by the acceptance letter. Asking these six questions can help.

More On College Financial Aid:

What type of financial aid is being offered?

What type of financial aid is being offered? © cjgphotography/

Typically, an offer letter will include a dollar amount and some description of how that money will be distributed. Unfortunately, colleges sometimes obscure the fact that the money will come in the form of various loan products, Lockwood says.

“If the offer is described as anything other than a scholarship or a grant, it’s not free, and that money will need to be repaid,” Lockwood says.

But those buzzwords — whether or not they appear in your letter — shouldn’t end your inquiry. In fact, Lockwood says most students and parents should take the time to ask questions about the offer letter and clarify anything they don’t understand.

If possible, Lockwood advises following up with a phone call or in person. But some financial aid offices may not be responsive. Getting answers may be frustrating, but students and parents shouldn’t accept an offer they don’t understand.

More On College Financial Aid:

What kinds of student loans are available?

What kinds of student loans are available?

The type of loan your student takes out can have a huge impact on his finances after graduation. Unfortunately, the terminology surrounding student loan products can be incredibly confusing.

“The irritating thing is that two different financial aid offices can refer to the same loan product differently,” Lockwood says. “For example, ‘direct loans’ is the new term for Stafford loans, but not all colleges have adopted the new nomenclature.”

While it’s important to get a handle on the lingo, parents and students need to understand the terms of each loan product. That means understanding the interest rate, when repayment should start, and whether the rate is fixed or adjustable, Lockwood says. It’s also a good idea to ask what happens if the student is unable to make the payment.

And, while most parents are likely to be involved in their student’s financial aid process, they’ll want to specify whether they’ll be asked to co-sign for a student loan. If the parents do co-sign, they should ask about how they can come off their co-signing obligation, Lockwood says.

More On College Financial Aid:

What’s the real cost of attending?

What's the real cost of attending?

We tend to fixate on the tuition, but the fact is college students incur a range of costs, from room and board to books and lab fees. And most students need some spending money. But if you’re looking to compare prices based on an award letter, you might find it difficult.

“Every college publishes a cost-of-attendance figure that includes hard costs like tuition, fees, and room and board, (as well as) soft costs like books, transportation and living expenses,” says Joseph Orsolini, president of College Aid Planners in Glen Ellyn, Ill. “Some colleges will use the hard cost only in their award letters, while others show the full cost-of-attendance figure.”

To get an apples-to-apples comparison, Orsolini suggests comparing only hard costs because every school provides those figures. Still, parents and students shouldn’t ignore soft costs.

“Some students look past the other costs, but you will still spend money on books and personal expenses,” says Steve Booker, director of financial aid at Rollins College in Winter Park, Fla. “Knowing what these estimated costs are and what options are available may help you minimize these costs.”

More On College Financial Aid:

Does the aid change after freshman year?

Does the aid change after freshman year? © karen roach/

While college is almost always a multiyear endeavor, offer letters can be tricky because it’s not always clear if the aid covers all four years.

“Many award letters will state if an offer is valid for only one year or for all four years, and what targets must be hit in order to keep that aid,” says Kevin Campbell, a college funding adviser with College Planning Authority in Fort Worth, Texas. “If the letter does not state that, contact the school for clarification.”

It’s also wise to read the fine print on scholarships. Typically, that money is contingent on maintaining a minimum grade-point average. “If that minimum GPA is not met, you may lose the scholarship,” Campbell says.

Also, Lockwood says remember that only a handful of colleges lock in financial aid for all four years. In most cases, students need to reapply for financial aid each year. That aid should stay the same, assuming the family’s financial circumstances haven’t changed. But that’s not always the case.

“Some colleges have an insidious habit of pulling money away from you each year on the basis that the student will have more resources because he will be able to work over the summer,” Lockwood says.

More On College Financial Aid:

Do outside awards impact your offer?

Do outside awards impact your offer? © Keith Bell/

While it’s always a good idea to look into grants and scholarships that are awarded by outside organizations, students and parents need to be aware of the possibility that those funds could end up reducing the amount that students receive from their schools.

“Many schools attempt to add an outside scholarship on top of your current awards, but it’s not always possible,” says Booker. “Find out if the school will reduce loans or other self-help awards before reducing institutional grant or scholarship funds.”

If the outside scholarship ends up costing you more money than it’s worth, you can always decline the award, Booker says. But to make an informed decision, students and parents need to contact the school’s financial aid office before they accept an outside scholarship.

More On College Financial Aid:

Can you get more money?

Can you get more money? © Shawn Hempel/

Colleges don’t advertise it, but offer letters are negotiable. Of course, you need to have a reason, and it can’t just be “I need more money,” says Orsolini of College Aid Planners.

“Colleges generally put forward their best possible financial aid package,” Orsolini says. “They don’t change aid packages unless there is a strong reason to do so.”

But college finance consultant Lockwood says most students have some room to negotiate.

“You should always ask,” he says. “This is not the time to be proud. It’s OK to use a little emotion, but use your judgment as to whether you’re laying it on too thick.”

Parents and students should always remember that being polite goes a long way, especially when you consider how many angry phone calls financial aid officers receive. Beyond politeness, Lockwood says you need to press your case.

If the school is your student’s first choice, say so. If you’re being forced to consider other schools solely because of financial issues, make that clear to the financial aid office. And provide them with copies of superior aid letters from competitive schools. If something such as a lost job or divorce has negatively impacted your finances during the application process, say so.

More On College Financial Aid: