7 Ways to Cut College Costs

Consider a school's financial aid package and graduation rates, among other things.

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Does anybody else out there think it's obscene that dozens of schools now charge more than $50,000 a year?

These price tags are frightening, but they are also largely meaningless. That's because most families will not pay anywhere close to $50,000 for a school.

[Read more about finding the real cost of college.]

When my two children were visiting schools, one of their main goals—beyond finding great colleges—was to locating schools where we wouldn't have to pay full price.

Checking the generosity of a school is just one way to cut college costs. Here are some others:

1. Don't just look in your backyard. About one out of every three college students attends a school that's no more than 50 miles away. And most of these schools are public institutions.

For some students, however, distant private colleges will cost less than public universities after financial aid and scholarships. My son's best friend in San Diego, for example, will be attending Carleton College in the fall after receiving a large financial aid package from the liberal arts college in Northfield, Minn.

The price tag for Carleton College's tuition and room and board is more than $52,000, but it will cost my son's friend just $7,000 or $8,000 a year. That's some deal.

[Read more about paying for college.]

2. Pay attention to graduation rates. Most families mistakenly assume that their children will graduate in four years. Fewer than 60 percent of college students graduate in six years! Always examine a school's graduation rates and find out what it takes to get out in eight semesters. The U.S. News Best Colleges rankings and College Results Online are resources that can help you pinpoint grad rates.

3. Look for the schools with generous financial aid packages. A good place to evaluate the generosity of a school is to look at its financial aid statistics on the federal College Navigator site.

4. Obtain a preliminary EFC. Before you begin looking at schools, check what your family's Expected Family Contribution will be. This will be the amount of money, at a minimum, that you will need to cough up for one year of college. In many cases, you will have to provide more than that figure. You can find online EFC calculators at FinAid.org and the College Board.

5. Apply for aid regardless of your income. Families that make $150,000 to $200,000 a year can sometimes qualify for significant need-based aid at pricey colleges. If you don't file the FAFSA—and the CSS/Financial Aid PROFILE for some private schools—you won't qualify for need-based help. Without completing the FAFSA, you also won't have access to federal college loans.

[Read about how federal loans are getting cheaper and easier.]

6. Look for merit scholarships. At private schools, 82 percent of students receive merit aid. About two-thirds of students at public and private institutions combined receive some type of grant. An excellent resource for scholarships that colleges offer—the biggest source of college grants—is MeritAid.com.

7. Beware of reach schools. The danger of reach schools is that they often give little or no financial aid or scholarships to students who barely get in. Most schools reserve their best aid packages to the students they really covet.