By
msnbc.com contributor
updated 4/17/2008 7:41:19 AM ET 2008-04-17T11:41:19

Anyone can go to college. Even the most financially challenged can draw on financial aid or loans or find a low-cost school.

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At least that’s what the experts have always said.

But it’s getting tougher. Most colleges mail their financial-award letters in April, and it’s a safe bet that most families will be disappointed, especially this year.

College costs continue to rise faster than household incomes.  Although you may have seen news stories in the past few months about colleges that have dramatically improved their financial aid programs, this is largely confined to elite schools with huge endowments.

Now the credit crisis that began a year ago with the subprime mortgage meltdown has spread to the college loan industry.

Many lenders trying to contain risks have made it harder to qualify for college loans. Some private lenders have raised interest rates or stopped lending to students altogether, worried that the weakening economy means graduates will find it hard to get the jobs they’ll need to pay the money back.

Congress is considering various measures to strengthen federal student loan programs. A House committee has approved increasing the four-year undergraduate loan limit to $31,000 from $23,000. The Department of Education is looking for ways for federal agencies to make student loans directly rather than just guaranteeing loans made by private companies, which are scaling back.

But any action from Washington probably won’t come soon enough to affect the decisions families have to make this spring.

What should you do if you’ve been offered a financial aid package that simply isn’t big enough? Negotiate.

Colleges can sometimes be convinced to sweeten the deal. In fact, because they are no longer allowed to consult one another to compare offers to specific students, they’ve had to become more flexible about making counteroffers to beat competitors. Colleges cannot withdraw an offer of admission just because you ask for more help, so you have nothing to lose by trying to improve the aid package.

But money is limited, and you’re competing with other families, so make your request right away. Your leverage is better before you’ve accepted the admission offer, rather than after.

Start by comparing the offers you received from various schools. Don’t fixate on the total aid figure, which may include grants and scholarships, work-based loans and work study. The most important figure is the family contribution — what you’ll have to pay on top of the other sources.

Remember that grants and scholarships, which don’t have to be paid back, are better than loans, which do. One school requiring a somewhat higher family contribution may actually be more generous than a competitor that has a lower family contribution but emphasizes loans rather than grants. The College Board has a good calculator for comparing aid packages on its Web site.

Double-check your aid application, looking for any errors that might have made your finances seem stronger than they are. Then list anything that has changed since the application was filed two or three months ago. Has the family’s income dropped due to a lost job or a reduction in working hours or shrinking commissions? Has the turmoil in the stock market reduced your investments’ value?

Your request for more aid is not limited to the topics covered in the aid application. Most forms, for example, don’t count the value of the family’s home. But perhaps you were planning to take out a home equity loan for college costs. If you can’t get one now because home prices have fallen, be sure to say so.

Perhaps your living expenses rose for some unavoidable reason, like the need to help out an elderly relative. Or maybe your employer has cut back on reimbursements for business expenses. Tell the college.

Assemble your evidence and then phone the college’s financial aid office. Try, without being too pushy, to reach the highest-level person you can. Be prepared to follow up with a certified letter to make your case, and be ready to document your claims if asked. Keep a record of who you talk to and what was said.

If the student is a high school senior, financial aid may well affect the decision about which school to attend. If his or her first choice has offered less than other schools have, tell the first choice you’ll accept the admission offer immediately if you can get more help.

If you will argue that another school offered more, it’s better to show a generous offer from a high-quality college, rather than a safety school that was easy to get into. Be realistic about how badly the school wants the student. A student who was a long shot for admission may not have much chance of sweetening the aid package. 

Keep in mind that financial aid officers are not paid a lot, and probably don’t like hearing about the hardships of people who make more. Also, they do this all day, every day. They can smell a con job a mile away.

Obviously, you should be polite and businesslike — no ranting and raving, no threats. Don’t use the words “negotiate” or “bargain,” as this might seem offensive. Say that your son or daughter desperately wants to attend that college, that you’ll do anything necessary to make that possible, but that you just can’t manage without a bit more help.

Be specific about your request. Don’t just say "we need more," say how much more.

What if you’re turned down?

Most parents want to put the children first. But think carefully before taking extreme measures like raiding retirement accounts. If you retire without enough savings, you won’t have time to make up the difference, but young people have lots of time to overcome a financial obstacle.

One option is to attend the school that is cheaper or offers more aid, then to try in a year or two to transfer into the more expensive school. The student will still get the more prestigious diploma.

Or the student can work for a year or two before starting college, saving money to help with costs. He or she could go to school part-time while working.

The armed forces offer many types of education benefits. Americorps, the national service program, also offers student aid

Finally, take a reality check. Sure, your son or daughter may be yearning to go to an expensive private college, but many, many people have received fine educations at public institutions that are much cheaper — and they’ve had lots of fun, too.

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