The Educated Parent

Learn some financial aid lessons and make your child's education more affordable.

There's nothing quite as rewarding for a mother as sending her child off to college. Unfortunately, with annual tuition at elite private schools approaching $60,000 a year, and even in-state public school costs hovering around $20,000 a year, the dream of providing a top-notch education for your child can seem out of reach. But the fact is that the following lessons can make a college education fit into every family's budget.

Lesson #1: Apply for it. It seems to go without saying, but the only way you're going to get financial aid is to apply for it. Many parents are convinced that their income is too high for them to get any aid. But the truth is that families making as much as $100,000 a year can still be eligible for some assistance. The first step is to fill out the Free Application for Federal Student Aid (FAFSA). The application must be filed between January 1 and May 1 of the enrollment year, but you should send it in as soon as possible since schools tend to give the best packages to early applicants. (To get a head start and avoid mailing costs, use the FAFSA Express.) You may need to fill out additional forms, such as the Financial Aid Profile or a separate application for an individual college.

Lesson #2: Don't make yourself look rich. Your financial aid package is based on the year before your child goes to school, so be careful not to do anything to inflate your earnings that year. For instance, if you have any stocks or mutual funds that have increased in value, try not to sell them from the year before your child enters college to the year before she graduates. The reason: The capital gains you incur on the sale will make it look like you earn more than you actually do and could have a major impact on your aid package. Since your aid package also takes your savings into consideration, this would be a good time to lower your bank balance by paying off credit card debts or accelerating a large purchase you've been planning, such as a car or computer. Another strategy is to increase your contribution to retirement plans to the maximum allowed; most colleges won't take that money into account when figuring your aid package.

Lesson #3: Don't take no for an answer. Once the financial aid offers arrive in the mail, you begin the hardest part of the process — trying to get more. Most schools are unable to meet 100 percent of your need, but they may be able to do better than their first offer. A college can adjust your package in two ways: The first is meeting more of your need; the second (and more important in the long term) is transferring some of your package from loans to grants. Loans can strap you with debt for years, whereas grants never have to be paid back. To negotiate successfully, you usually need a specific reason for getting a larger aid package. For instance, if you or your spouse have lost a job or received a pay cut, or if your child support payments have been reduced, you may be able to argue for more aid. It's not just dire circumstances that can help you negotiate, though. Some expenses, such as child care or caring for an aging parent, are not included on the FAFSA but should certainly be brought to the attention of financial aid administrators. Finally, once your child gets offers from a number of colleges, show the best to the schools where your child especially wants to go. The prospect of a competing school sweeping up a qualified student is often all it takes to make a college boost its offer.

Lesson #4: Create a plan. The most important thing you can do as you figure out how you're going to afford your child's education is to plan ahead. That's where our Financial Aid Estimator comes in. Knowing what to expect can help you better plan for the future.

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