The Real Cost of College: Most Students Don't Pay the Full Sticker Price for a College or University Education-Especially If They Actively Seek Financial Aid

Article excerpt

By the time Joseph Schwingl was a senior in high school, he knew he wanted to pursue a degree in criminal justice at St. John's University in New York City. But there was one obstacle: the cost. At $29,000 a year, St. John's seemed out of reach.

But when he received his aid award notice in the mail, Schwingl says he was "relieved--and surprised." Based on his need, the school gave him a community recognition award of $2,000 and a financial grant of almost $9,000. Work-study provided an additional $5,000 and New York State chipped in $766. To make up the rest, Schwingl qualified for federal loans--the Perkins, the Stafford, and a PLUS loan for parents.

"Many prospective students do not even apply to more expensive schools simply because of the sticker price," says Dan Lupin, director of financial aid at Embry-Riddle Aeronautical University in Prescott, Arizona. "Students should apply to the school of their choice and then let the school help them determine if attendance is financially feasible."

Financial Aid Basics

There are two types of financial aid: merit-based and need-based.

Merit-based aid is typically a scholarship given by a private institution, your college, or the government. These awards recognize your individual talents.

Need-based aid is awarded according to your ability to pay for college. To figure out your Expected Family Contribution (EFC), colleges look at your family's income, assets, and other financial data that you provide on the Free Application for Federal Student Aid (FAFSA) and often on the College Board's PROFILE form. (For more information, check out and Colleges calculate your need using this formula:

Cost of attendance - Your EFC--Outside aid (scholarships) = Need.

Colleges then put together an aid package comprised of loans, grants, and work-study.

Don't Rule Yourself Out

A lot of students think they're not "needy" enough to qualify for financial aid. "About a third of our students don't even apply for financial aid because they think they're not eligible [or] are too affluent," says Jay Leiendecker, vice president for enrollment services at Dean College in Franklin, Massachusetts.

The fact is, even a family with an annual income of $100,000 may still qualify for aid. Income isn't the only factor in the need equation. For instance, an applicant may have siblings in college, older parents, or a recent financial setback affecting his or her family.

Don't Be Late

You can't file your FAFSA for the 2007-2008 school year until January 1, 2007. But it's a good idea to submit your form as early as possible after that date, because a lot of financial aid is awarded on a first-come, first-served basis, and the best awards are generally given to the earliest applicants.

Your Financial Aid Package

Your financial aid will consist of three possible types of awards: scholarships and grants (money you don't pay back), loans (money you must pay back), and work-study (money you earn).

Federal programs supply about 66% of all financial aid to undergraduates in the form of:

* Pell Grants. For students who show significant need. The maximum award is $4,050 per year.

* Supplemental Educational Opportunity Grants (SEOGs). For students with exceptional need, these awards range from $100 to $4,000 per year.

* Work-Study. For undergraduates demonstrating financial need. These jobs pay at least minimum wage.

* Perkins Loans. For students demonstrating need, these loans have a guaranteed low interest rate of 5% and provide undergraduates with up to $4,000 per year to a total of $20,000 over the course of their undergraduate careers.

* Stafford Loans. Available to students regardless of financial need, these loans have interest rates that cannot top 8.25%. The Stafford offers up to $2,625 per year for dependent freshmen, $3,500 for sophomores, and $5,500 for juniors and seniors. …