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Countdown to college: Financial aid 101

By Lee Shulman Bierer, The Charlotte Observer on

Published in Education News

The first question students ask is: "Will I be accepted at college X?" The first question parents usually ask is" "How can we afford to pay for college X?"

With college tuition prices escalating annually and outpacing the cost-of-living index, discussing what funds are available for college is a conversation every family needs to have. Figuring out how much a college costs isn't so simple. Yes, every college posts its "cost of attendance" - the sum of its tuition, room/board and student fees - on its website. But the truth is that most families don't pay "retail." The sticker price, as with airline tickets, can vary widely. Some students earn scholarships, many receive grants or work-study employment that defrays these costs, and many more are offered loans through the university.

The important thing is to determine your family's debt tolerance. How much money are you as parents willing to borrow to finance your child's education? How much debt should they be taking on? What are their employment expectations after graduation? Many families want their children to have some "skin in the game" - i.e., take some measure of financial responsibility for their education, in the belief that this will make them take their classes and grades more seriously.

Paying for college is difficult enough. The fact that financial aid offices have a language all their own doesn't make it any easier.

Today's column is a basic financial aid primer. I suggest reviewing the following glossary of terms before you complete the FAFSA. One of my favorite books on this subject is the annual "Paying for College Without Going Broke" by Kalman Chany and the Princeton Review. "The Complete Idiot's Guide to Financial Aid for College," "College Financial Aid for Dummies" and Princeton Review's "Colleges that Pay You Back" are also great resources.

Here's the beginning of the glossary, A to C.

Accrued interest: Interest on a loan that is not paid during the period of the loan but accumulates and is paid in installments at a later time.

Aid package/award letter: A combination of financial aid (scholarships, grants, loans and/or work study) determined by the financial aid office of a college.

Alternative loan program (ALP): Loans used to supplement the funds students need to attend college.


Base year: For need-analysis purposes, the base year is the calendar year preceding the award year. (Award year is July 1-June 30)

Co-borrower: A person who signs a promissory note in addition to the borrower and is responsible for the obligation if the borrower does not pay.

College Aid Sources for Higher Education: A free financial aid service offered by Sallie Mae (www.salliemae.org).

College Scholarship Service: This is an arm of the College Board and one of the agencies that processes financial aid information and applications. The CSS Profile is the customized financial aid application form required at certain colleges to determine eligibility for institutional aid. It considers: home ownership, K-12 private school tuition, regional cost-of-living differences, etc.

Cost of attendance: The total cost of attending a postsecondary institution for one academic year. It includes tuition, room and board, fees, books, and personal expenses. Just looking at the cost of tuition is misleading. Annual room and board fees can range from $7,224 at the University of North Dakota to $18,156 at New York University. Colleges tack on fees for student activities, printing, health insurance, borrowing of university-owned equipment, etc. Costs for books, supplies, personal expenses and travel can easily total more than $2,500 per year. College websites detail the current cost of attendance on their financial aid pages. Financial aid professionals suggest anticipating a 5 percent annual increase in tuition and associated fees.

Lee Shulman Bierer is an independent college adviser based in Charlotte, N.C. Visit her website College Admissions Strategies.

Visit The Charlotte Observer at www.charlotteobserver.com

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