If a university employee can’t figure out which financial aid package is the best for her child, what chance does the Average Joe have when faced with a similar choice?

It’s not as easy as you may think: You’re usually comparing apples to oranges to grapes to watermelons.

Joe Paul Case, director of
financial aid at Amherst College in Massachusetts, remembers well the day several years ago a colleague called on him for help. “She said, ‘I have four award letters for my son from four different institutions in New England, and I can’t figure out what’s the best offer,'” says Case.

One problem: The letters didn’t follow a full-disclosure model, so the true cost of attendance wasn’t clear. Case drew a grid and, piece by piece, they researched the costs beyond the obvious tuition, fees and room and board. That completed chart provided an apples-to-apples aid comparison.

“You want to compare the real price, not the sticker price,” says Mark Rothbaum, president of
Lunch-Money.com. As with any consumer purchase, the exercise requires both research and taking personal circumstances into account. Bankrate offers a
financial aid calculator to determine eligibility.

For instance, the location of one school could mean much higher transportation costs — and that’s even if your freshman doesn’t get homesick and want to jump on the first train, plane or bus out of there each Friday.

While deciding which school offers the best aid package is a whole lot more difficult than shopping around for the best bus fare home, knowledge of the process is power. Here’s what you need to know:

Aid jargon
First things first. Being an aid-letter lingo pro isn’t just about knowing the difference between your grants and scholarships (free money) and your loans (incurred debt).

Take the federal Stafford loan. With subsidized Stafford loans, the government pays interest while students are still in college (or later during deferment and grace periods). Unsubsidized Stafford loans, meanwhile, require that borrowers pay interest while attending college or add accrued interest to the principal loan amount when repayment begins.

Knowing who gets the money from each aid component also matters. Work-study awards are a classic example. Since the student works to earn this award over time, the funds aren’t credited directly to his college account and could wind up in the local pizza delivery guy’s pocket.

Expected Family Contribution, or EFC, is an especially important term to understand since that’s what a family is asked to put toward the student’s college costs. When there are shortfalls elsewhere in reaching a school’s total cost of attendance, it’s the EFC that grows. And while one might assume the EFC calculation is a standard one, schools can use different formulas.

If every financial aid award package featured the same format and terms, side-by-side comparisons would be relatively easy. But they don’t, and they’re not.

A few years back, Case served on a National Association of Student Financial Aid Administrators committee that created a recommended pattern for an award letter based on the full-disclosure model used by Amherst and other schools. Now, aid administrators can plug their letter’s components into an evaluator tool to see how it stacks up against that model. But it’s all voluntary, Case says, noting that even if everyone wanted to adopt the model, existing computer systems might keep them from the change anyhow.

Out-of-pocket costs
Beyond the billed amount, what will your family need to finance? From books and travel to personal expenses, you should make sure to include everything in your comparison.

And don’t assume the school is providing accurate estimates, Case says. Amherst surveys students every three years to recompute average expenses. Assess how reasonable a given figure is by breaking it into monthly and weekly allowances.

Splitting the award letter components into common categories based on who has to pay for what can help in determining net family cost. First, separate scholarships and grants from loans and work study. Next, take the total cost of attendance and subtract the grant and scholarship totals. This leaves the net cost, which includes any work and loans the students would be expected to assume, as well as the calculated parent and student contributions.

Or, determine the net student cost by deducting the expected family contribution and the total grants and scholarship help from the total cost of attendance. The resulting figure is the student’s responsibility — a real eye-opener for a teen whose heart is set on a certain school.

A family conversation might go something like this, says investment adviser Harold M. Simansky, author of “College Costs How Much?!” an evaluation workbook: “If you go to the University of Connecticut, your loans are going to be nonexistent, your work study nonexistent. Or you can go to Bowdoin College in Maine, where work study is 11 hours a week and you’ll have $30,000 in loans, or $300 a month for the next 20 to 30 years.”

Of course, details like these aren’t likely to be highlighted on financial aid award letters. That’s where online evaluators can help:

  • American Education Services’ Award Analyzer can be used to determine which school is prepared to give the most aid. Analyses can be stored for future reference.
  • Lunch-Money.com offers a “real price tag”
    Financial Aid Award Evaluator that calculates your contribution, including monthly payments, for various loan packages.
  • Sallie Mae’s College Answer Web site has an
    Online Award Analyzer that provides estimates of monthly payments for different loan amounts, as well as multiple financing scenarios.

When there’s a gap between a family’s need and what an institution can offer to fill that need, there are options beyond increasing the family’s contribution. Ask each school if an outside scholarship help plug that gap.

“Our own policy is that it can replace the loan and work study first,” Case says. But these additional funds at some schools can reduce the grant aid provided.

In store for all four
Here’s where a chat with a financial aid officer can really pay off. Is the pattern of self-help (work study and loans) going to remain steady for future years of school? What’s the average student debt at graduation?

Case also advises families to learn more details about work study, such as how easy it is to find a job on campus, whether assistance is available when jobs seem nonexistent, and how voluntary jobs such as internships may effect the work-study requirements. (Amherst, for example, will replace work study with a scholarship once to allow for an internship.)

Another question for worldly wise students: Can institutional aid be taken with me if I study abroad?

More schools equal more options
With a bunch of schools in the aid package mix, one institution’s generosity may well stand out. You might approach another school to see if they can match the package awarded elsewhere, says Simansky, who adds, “Schools hate it when families try to negotiate.”

Rothbaum advises approaching it not as a negotiation but as a, “Can anything be done?” request. It’s a good time to bring up any special circumstances the school may not be aware of, such as parents caring for a sick relative. Schools “want to make it an affordable option,” he adds.

Another reason for applying to several colleges is that you never know which one — it may be the priciest — will come through with more aid. “It’s the great paradox,” says Simansky. Some of the most generous schools when it comes to giving grants are in fact private schools.”

That’s why he recommends focusing on the big issues, such as size of school, proximity to home and what to study, first. “Eventually, the price issue is seen in the context of other decisions.”

Melissa M. Ezarik is a freelance writer in Connecticut

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