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Multiplying by Four

Calculator. Advice on college financial aid

When you excitedly clicked on that e-mail or ripped open that thick envelope, you probably focused all your attention on the first word: "Congratulations!" With luck, though, there was more to come, in the form of a merit scholarship. These awards are often a kind of tuition discount, given to entice relatively wealthy families. For instance, if the full cost of attendance is $55,000, and the student receives a very generous $12,000 "Dean's Scholarship," the college still nets $43,000 every year that the student attends.

Many families can't afford those $43,000 checks, though. For them, the more important financial aid notification arrives in late March or early April. This statement lays out everything the student is expected to pay, and how the college suggests your family cover the charges. Be very careful as you compare these award letters -- they can be confusing, to say the least!

Start by figuring out what the college will cost after tuition discounts (merit money, college-based grants) and government awards (federal and state) are taken out. This is your actual cost of attendance; use this to compare apples to apples among colleges. Be sure to read the fine print and multiply the yearly amount by four!

Most award letters then suggest how to cover this actual cost of attendance, listing things like student loans, work-study, parental savings, private loans, summer jobs and parent PLUS loans. They invariably show a zero balance at the end. But some of these choices -- such as private loans and parental PLUS loans -- may place an unacceptable burden on your family.

Instead, develop your own summary of what you can afford. A student can certainly work a reasonable number of hours during the school year and over the summer. A student can also take out government loans up to the federal limit. Some parents can afford to pay a certain amount out of savings and cash flow. But if there is a balance left over beyond that, the student should probably look for a cheaper college. You did apply to some financial safety schools, didn't you?

If you are a senior, your choices are before you. But if you haven't applied yet, let me help you consider financial as well as academic and social fit in your college list. Just click the "Contact Me" button below, or give me a call at 847-660-8625.

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