The recession and sputtering economy made it harder for families to pay for college even as they have hurt college endowments. On March 1, the Department of Education warned that the across-the-board budget cuts known as "sequestration" would hit federal financial aid programs hard.
Still, resourceful parents and students will find that there's money out there for those who know where to look – and how to speak up when that fat welcome package announces a scrawnier-than-expected financial aid award.
The typical aid package includes federal need-based grants, work-study funding and subsidized Stafford loans, where the government pays the interest for you while you're in school, based on your family's financial information on the Free Application for Federal Student Aid. The state may provide some funds, too.
Then there are merit scholarships offered by the institutions themselves for academic achievements or talents. Finally, there are federal loans that aren't subsidized, for anyone who wants to borrow extra, and parent PLUS loans.
[See which colleges have the most students receiving merit aid.]
Retired pharmaceutical executive David Goldman learned the art of negotiating when his oldest child got into two schools she liked.
"We went to both colleges and showed each one the other college's offer. We actually found they were very responsive. They might not like the word 'negotiation,' but clearly this was a negotiation," Goldman says.
Using that tactic and others he learned along the way, such as nudging his kids toward well-funded private colleges that would be likely to reward them financially for academic achievements, Goldman estimates he has obtained more than $200,000 in merit aid for his four children.
Keep in mind that colleges that give you the same bottom line can get there different ways. Schools have plenty of leeway in how they balance grants and loans – a much-desired viola player or student government president with perfect SAT scores might get 75 percent grants and 25 percent loans, say, while you're offered just the opposite – and you're clearly better off with the biggest possible handout.
But you can't assume you'll save by limiting your choices to public schools, warns Beth Walker, a financial planner at Strategic Wealth Associates. "The majority of what state schools have to offer is loans," she says. Even though when it comes to well-endowed private colleges the "retail sticker price is considerably higher, they can give away more free money."
According to a survey released in May by the National Association of College and University Business Officers, 65 percent of private colleges increased the amount by which they "discount" tuition via grants and scholarships for the 2011-2012 year. The average discount rate reached an all-time high of 45 percent in the fall of 2011.
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Even if your child isn't a sought-after scholar, you may be able to successfully appeal for more funding after you receive your award letters.
Linda Parker, director of financial aid at Union College, says she often reconsiders students' financial aid packages when family circumstances have changed – a parent has lost a job or become ill, for example. "If they document that, and send in the new information, often students receive increased awards," Parker says.
To help families in the struggle to figure out what college is really going to cost, the Department of Education requires all schools to post net price calculators on their websites. The calculators use financial information provided by parents to estimate what the family's final bill will be, including room and board, and accounting for the federal and state aid the student is most likely to receive.
College advisers warn parents, though, that the quality of the tool varies by school, and it may not collect all the information it needs to spit out a truly accurate figure.
"It's a great thing to examine, but all you're going to get is a ballpark," says William Wozniak, director of marketing at the nonprofit ISM College Planning, which counsels high school students on the application process.