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Paying for college
5 Tips: Bringing college costs within reach.
March 29, 2005: 2:14 PM EST
By Gerri Willis, CNN/Money contributing columnist
Costing U.
Average cost of tuition, fees, room & board 2004-2005
Source:College Board
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CNN's Gerri Willis shares five tips on paying for a college education.
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NEW YORK (CNN/Money) - College acceptance letters are coming soon to a mailbox near you. In other words, it's about that time when parents and students begin to get nervous about the final step to the college application process: financial aid.

It's a confusing course. We'll help your steer, in today's five tips.

1. Don't panic over the $.

We all know college isn't going to come cheap. According to the College Board, tuition, fees, room and board during the 2004-2005 school year cost $11,354 at a four-year public institution, and $27,516 at a four-year private university on average. Some top-tier and Ivy League schools are charging more than $40,000 a year.

Don't panic. Mark Rothbaum, president of, says, "The price tags especially at Ivy League schools can be very overwhelming. But keep in mind, most families don't have to pay that full price."

This should make you breathe a little easier: the College Board says nearly 70 percent of students attending a 4-year school pay less than $8,000 a year for tuition and fees. From where does the rest of the money come? Financial aid: grants and loans.

2. Fill out your FAFSA.

To begin the process of financial aid, fill out a Free Application for Federal Student Aid (FAFSA). The Department of Education, which processes these forms, has been accepting them for the 2005-2006 school year since January 1. You can find the form on the Web at or call 1-800-4-FED-AID.

Documents you will need for the application include: a W-2 form from the parents and student, mortgage and investment statements, and bank statements.

About two to four weeks after submitting your child's FAFSA, you'll get your Student Aid Report (SAR). You'll want to look at your Expected Family Contribution or EFC, that's the amount your family is expected to pay out of your own funds towards annual tuition. If your EFC says you must contribute $15,000 and the college's tuition is $25,000, your child's financial need is $10,000.

When the student applies for financial aid with the school, the institution will try to design a package that can meet that financial need. The aid package may contain a mix of loans, grants, and work-study. Most packages are made up of federal loans.

Grants can be federal and institutional -- possibly from university endowments. Work-study allows students to pay part of their tuition by working in programs subsidized by the federal government.

3. Get your best package.

Each package is different. To help you evaluate and compare packages, check out's Financial Aid Award Evaluator or College Board's Aid Comparison Tool. Some packages are better than others because they offer more grants and fewer loans.

Your instinct may be to choose a school based on its financial aid package. But don't fret if your child has a better financial aid package at School A but would rather go to School B. In some cases, you can use School A's financial package to bargain for a better one at School B. But you are more likely to win while bargaining with a private school with a large endowment (think Ivy League) than you are State U.

Write a letter to the financial aid office stating your concern over the package your child received, and include a copy of School A's better offer.

Rothbaum advises you to be open and honest and not argumentative. Explain how your child wants to attend School B but the financial aid package you received won't make it affordable, then show how School A's package works for your family. Send copies of all documents to the admissions office and any university official who expressed interest in your child (coach, professor).

The Admissions Department of most schools prides itself on creating a diverse student body, and may go to bat for your child. A coach or professor looking for your child's talent may do the same.

If you feel your family's ability to pay for college has changed over the past year due to a job loss, an illness, a death or divorce, you can also make an appeal with the financial aid office for a better package offer.

4. Make up the difference.

Unfortunately, not all students' needs are met through just financial aid packages. While your EFC is the same whether you apply to a state school or to Yale, you aren't guaranteed all your financial need will be met by your financial aid package.

You can also look for scholarships outside the University. College Board offers a free scholarship search tool that searches nearly 2,300 sources, offering a total of $3 billion in free college money to find awards for you.

If you still fall short, you might have to ask your Mom & Dad for help, tap into your home's equity, or take a private loan with a bank.

5. Don't give up.

Planning your college finances can seem overwhelming and stressful. But remember, as an investment, it has one of the best, (nearly) guaranteed returns. According to U.S. Census Bureau statistics, people with a bachelor's degree earn more than 70 percent more on average than those with just a high school diploma.

In dollar terms, Junior will earn more than $1,000,000 in his lifetime because of his college degree than his slacker friends who decide to stay home and mooch off Mom & Dad instead.

Gerri Willis is a personal finance editor for CNN Business News and the host for Open House. E-mail comments to  Top of page


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