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Word to Families: Be Savvy When Comparing Financial Aid

As students weigh their college options this month, cost is an increasingly important factor. And that means taking the time to carefully sort through and compare financial-aid packages.

Students are relying more on grants, scholarships, and loans to finance their education, according to reports from Sallie Mae and the College Board. In a recent survey, a Princeton Review survey found 86 percent of families think financial aid will be very necessary.

Many families are sitting around the kitchen table in April reading through thick packets of materials in which colleges tout their merits and are welcoming students with open arms. Tucked inside are details on the bottom-line cost—the real price with discounts, work-study, scholarships, and loans. Students could have gotten some notion of this through the new net-price calculators, but now the dollar figures are concrete.

Families should look closely at the financial-aid offers to sort out the free money from the loans, according to a piece in U.S. News and World Report, Avoid 5 Assumptions About Financial Aid. If you are considering a loan, research underscores the value of exhausting the federally protected options before turning to private loans. With the average student graduating with nearly $25,000 in student debt, think about how those loans will impact your lifestyle after school.

Consider the long-term financial picture. When calculating costs, it's probably safe to assume tuition will go up over the next four years, judging from past trends tracked by the College Board here. Find out if financial-aid awards are renewable, and if you are a Pell Grant recipient, be aware that the future of the program is being debated, and amounts may fluctuate with the political winds.

As you revisit colleges, dig for more information about finances. While there are no guarantees, it doesn't hurt to stop by the financial-aid office to discuss the possibility of more assistance. Find out in your area of study if it is possible to finish a degree in less than four years to save money. Also, see how many AP credits might be accepted—something that could shave a semester or so off college costs if you are lucky.

Finally, although many students say they want to attend a college farther away from home than their parents want them to, figure out travel costs to campus. Get quotes on airplane, bus, and train tickets to and from your dream college and think about how many times you might come home next year. It all adds up.

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