How to Pick the Best College for You (and Your Wallet)

What if you’ve gotten multiple acceptances and can’t decide where to send that one deposit check?

Mark Kantrowitz
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Students applying to college and for financial aid are being hit with a double whammy right now: Acceptance letters and financial aid packages are making their way into mailboxes, and certain provisions in the controversial healthcare bill recently signed by President Obama promise big changes to the student loan industry.

[Read Big Changes Coming to Student Loans.]

Change might be on the way, but making sense of the language and the breakdown of various forms of aid on your award letters right now—and using that information to compare colleges—can be tricky enough. To get the skinny, we spoke with Mark Kantrowitz, founder and publisher of FinAid.org and publisher of FastWeb.com, two hot online resources for financial aid tools and advice.

What is the first thing students should look at when they get their financial aid package?

A lot of these financial aid award letters will not be entirely upfront about all the costs. It won't be possible, right off the bat, to do an apples-to-apples comparison. Schools might not be listing the same set of costs. Some might just be listing tuition and fees; others might be listing the total cost of attendance, which includes room and board, books, transportation costs, and miscellaneous expenses.

What is the best way to determine that "total cost of attendance" for a school?

Visit the financial aid section of the college's website. Sometimes they'll bundle everything together into one overall figure. The school's catalogue often has detailed information. You can also always call the financial aid office.

[Read Comparing Financial Aid Offers.]

What figures, exactly, should students be comparing across colleges?

There are two different figures you can look at. One is the number that the colleges tend to emphasize—the net cost. This is the need-based financial aid package subtracted from the total cost of attendance. And make sure that you're not subtracting any unsubsidized Stafford loans or Parent PLUS loans, because that is not need-based financial aid.

Your out-of-pocket cost, which is what you get when you subtract only grants and scholarships—that's your free money—from your total cost of attendance, is more important. This is more important because everything else is money you're going to have to come up with on your own, either by working for it through work study, borrowing it, or taking it out of your savings or some other source. Loans aren't really financial aid. They might provide cash flow assistance, but they're not giving you money that doesn't have to be repaid.

Should you subtract work study from total cost to get your out-of-pocket cost?

Yes and no. I don't care whether you include it or not, as long as you're consistent across the colleges. Work study is part-time employment. If you don't want to consider work study as a form of financial aid, then exclude it from the subtraction. I usually exclude it.

[See our Financial Aid Letter Decoder]

Once students know the out-of-pocket cost for each school, then what?

Cost shouldn't be the only factor in your decision, but it should be a contributing factor. If the difference in out-of-pocket cost between two colleges is $1,000 or less, it really shouldn't make that much of a difference in terms of which of those colleges you choose.

If you have a significant difference in out of pocket cost between several colleges, you should check the net costs of those colleges to see if those also differ. If net cost differs, that's usually a sign that there was a piece of information available to one college that was not available to the other colleges.

[Read College Acceptance Tips from guidance counselor Missy Sanchez.]

What kind of information?

Job loss, salary reduction, a family member's surgery, things like that. If you do have an unusual financial circumstance, you need to tell the school and ask for what's called a professional judgment review. Some schools call it a financial aid appeal or a special circumstances review.

[Read Run the Numbers]

So students shouldn't go back to the financial aid office to ask for more money unless there are specific circumstances?