I apply for college grants and loan

Deciding where to apply to college wasn't a hard decision for Kelly Kroslowitz. The native of Putnam Valley, New York, knew where she wanted to go: Saint Joseph's University, a small private school in Philadelphia. "I liked the campus and the emphasis on community service. Plus, it has a great elementary education program," she says. There was just one problem: the whopping price tag. Tuition and room and board added up to almost $27,000 per year.

A bill like that is enough to send anyone into sticker shock, but Kroslowitz didn't panic. "I applied anyway," she says. "And I was surprised to see that my most expensive college choice gave me the best financial aid package."

What Kroslowitz realized is that a school's "sticker price" call be misleading. The reality is that when it comes to college costs, the price you see listed is often more than what you pay.

DON'T BE FOOLED

Most people have an inflated perception of how much college costs. One reason, says Irvin Bodofsky, former chair of the National Association of Student Financial Aid Administrators, is that those "college-costs-will-break-your-bank" stories in the media tend to focus on the country's highest-priced schools. "Those schools represent a very small percentage of where students are actually going to college," Bodofsky says. In reality, 75 percent of students at public four-year colleges actually pay less than $6,000 per year for tuition and fees, while 25 percent of students at private institutions pay less than $15,000, according to the latest statistics from the College Board. The average cost for tuition, fees, room and board for 2004-2005 was $11,354 at four-year public institutions, while the average annual cost at four-year private colleges and universities is now $27,516.

Also intimidating, says Patty Little, director of student retention at Malone College in Canton, Ohio, are media reports that show how college costs add up over time. "You see it as the whole four-year investment, and it's overwhelming," she says. Families need to remember that they are not going to be forced to lay out the cash for all four years at once.

Another myth is that college costs are rising exponentially each year. In fact, the College Board reports that for 2004-2005, students paid $487 to $1,132 more than the prior year in tuition and fees, depending on the type of institution. That's hardly the "huge" increase that people often talk about.

THE REAL DEAL

About two-thirds of students don't actually pay the full sticker price, according to Stephen Kramer, president and founder of College Coach, a college advisory service (www.getintocollege.com). In fact, the College Board reports that a record $122 billion was available in financial aid for 2004-2005, and federal grant aid grew by six percent, while loan aid rose by 13 percent. Although students have to rely more on loans than before, interest rates have remained low (see page 44).

How much of that aid you receive is based on this basic formula:

THE COST OF ATTENDANCE--YOUR EXPECTED FAMILY CONTRIBUTION

= NEED

THE COST OF ATTENDANCE is the actual price tag that you will see listed in college guides.

YOUR EXPECTED FAMILY CONTRIBUTION (ETC) is the amount your family can afford to chip in based on financial data you provide on the Free Application for Federal Student Aid (FAFSA)--see page 26. Your family contribution should be what you really pay for college (not including student loans).

NEED is the dollar amount you ideally should receive in financial aid. Your college will try to create a financial aid package of loans, scholarships, grants, and work-study to meet that need. Any private scholarships you win will be added into your aid package, but note that these awards will not reduce how much you are expected to contribute toward your college costs. More scholarships, however, will allow you to borrow less. (For a complete look at financial aid sources, see page 8.)

Because each student's need is different, financial aid packages vary--and so does the amount that each student contributes toward college. Kramer compares the phenomenon to airline pricing. It's possible, he says, that the guy sitting in the next row in Psych 101 could be paying thousands of dollars less than you. "You can be getting the same classes," he says, "but you're paying a different amount."

What all this means is that when it comes to determining a school's price tag, the question is not "how much does the college cost," but "how much will this school cost ME?"

KNOW ALL THE COSTS

To get a clear picture of college costs, Jack Joyce, director of guidance services at the College Board, advises families to divide expenses into several general categories:

TUITION AND FEES. Don't forget to include items like deposits or application fees.

BOOKS AND SUPPLIES. Buying used books is a great strategy for saving money, but you can't always count on being able to find cheaper tomes. Computers are another item to include in this category. "A lot of colleges require freshmen to have a laptop computer," says Little. That can tack another few thousand dollars onto the budget--as can supplies or equipment needed for specialized majors.

ROOM AND BOARD. Most colleges spell out the basic costs pretty clearly. In addition, you need to budget for special furniture or supplies you might need (e.g., refrigerator rental). And if you plan on making daily three-hour long distance calls to your significant other, you'd better add a few hundred dollars to the telephone bill budget.

TRANSPORTATION. This category is often underestimated by students, particularly those who attend schools far from home and may have to fly home. "They may assume they'll take one or two trips home during the semester," says Bodofsky, "but if a student begins to be homesick or there are other problems, the costs may climb." Commuter students aren't exempt from these costs either--gas, tolls, and parking fees can add up.

PERSONAL EXPENSES. This covers laundry, toothpaste, soap, movies, late-night pizza, ski trips, parties, and everything else you're going to spend to take care of and entertain yourself. And that's not cheap.

MISCELLANEOUS. This accounts for those expenses not necessarily incurred by every student. Joining a fraternity or sorority? Plan on spending several hundred dollars for membership fees, T-shirts and events. Headed to Florida for spring break? Keep travel and housing costs in mind.

NEGOTIATE YOUR AID PACKAGE?

Once you have a clear picture of your costs and the amount of aid you're receiving, you will then know if you and your family have enough to pay the difference. If you're going to have great difficulty paying the balance, think about contacting the school's financial aid office. Your college may not have taken into account financial hardships like sick family members or a parent who's recently lost a job.

"For a school that is relying only on the FAFSA," says the College Board's Joyce, "it's very important that the student take an extra step to explain his or her family situation. Show that the most recent tax return doesn't reflect the current situation of the household."

If you do approach a school's financial aid office with a request for more money, be specific about your needs. "Don't say, 'I need lots more,'" explains Kramer. "Say 'I need an additional $3,000 of aid to make this a reality,' so that when the financial aid officer goes back to the department, he or she has specific points to make."

Bear in mind, though, that it's not likely the financial aid office will throw another $10,000 your way just for the asking. Often, the funds simply aren't available. "Resources are finite to a certain point," reminds Bodofsky.

THINK ABOUT LESS PRICEY OPTIONS

If you think you can swing the amount the school will cost you, great--sign the acceptance and start packing your bags. But don't feel disappointed if you decide the final figure is just not something your family can handle. Just because you can't afford one school doesn't mean you can't get a quality education somewhere less expensive. Bodofsky points out that many state schools are comparable in quality to the Ivy Leagues.

"You can get a quality education anywhere," says Michael Hendricks, dean of admission at Widener University in Chester, Pennsylvania. "It's what you put into it."

Tracey Randinelli lowered her costs at the University of Delaware by earning AP credits and graduating in three years instead of four.