Myth: Only lower-income families receive financial aid.

Reality. Anyone can receive financial aid if the college costs more than the family can realistically afford. Families first fill out FAFSA—Free Application for Federal Student Aid. From this form, an "Expected Family Contribution" is determined based on family and student income and assets. Nearly every college uses this EFC calculation, though some private colleges do additional calculations. If the college costs more than the EPC, the student becomes eligible for aid to cover the gap. For some families, this might mean that they wouldn't receive aid at a less expensive state college, but would receive aid if applying for a high-priced private college. Theoretically, any student should be able to attend any college they are accepted to regardless of their family's financial situation.

Myth: Financial aid is only loans and work study.

Reality: It's true that aid increasingly comes in the form of loans versus grants and scholarships. Aid at public schools is almost exclusively federal loans and work study. However, many private colleges do offer outright grants and scholarships from their endowment funds. This aid shrinks the out-of-pocket costs for families and makes private schools more affordable for modest-income families.  

Myth: It's not worth saving for college; that reduces financial aid.

Reality: You'll be offered a smaller aid package if you've saved diligently for college. But since loans make up much of the packages at many colleges, it's better to save in advance and earn interest than to borrow and have to pay interest.

Myth: Aid packages from schools are pretty much the same.

Reality: They vary significantly from school to school, particularly among private schools. That's why it's usually smart apply to several schools. Examine competing offers closely. One school may offer more aid than another, but the aid be mostly loans, while the other package may have more grants. The bottom line is: how much do you pay out of pocket or borrow.)

Myth: The aid package offered by a school is written in stone.

Reality: You can always ask a school to reconsider their aid package. Perhaps there's an error or misunderstanding in the financial information you provided. You may have special circumstances, such as unusually high medical bills or a disabled child. Or let them know you received a better offer of aid from another school. Whether the school improves its aid package will depend in part on how badly they want your child in their school, how many other students are applying for and the school's aid resources.

Myth: The sooner you apply for aid and accept it, the better.

Reality: It's certainly good to apply early for aid. Aid generally is passed out on a first come, first-served basis. However, if you appear too eager to the school, it may actually be less generous with its aid. Early decision applicants (meaning they commit to that school if accepted) often receive smaller aid packages.

Myth: You can't deduct the interest on college loans.

Reality: That was true up until January 1, 1998. That's when a new law kicked in that allows parents or students to deduct a certain amount of student loan interest for up to 60 months, depending on the level of their income.

Myth: Pick the school with the best aid package.

Reality: Cost is certainly a factor for most families. But ultimately, students should choose a school because it is the best school for their educational needs.

January - 30- 1998