Myths for Parents of High-Schoolers

Myth 1: Middle-class parents can't get aid. They can't if they don't apply, that's for sure. Parents sometimes fail even to consider selective private colleges, because they think they won't qualify for aid. Nothing could be further from the truth. Families with income between about $40,000 and $90,000 are considered middle class in the U.S. Even at the high end, most can qualify for aid at expensive private colleges.

There's no one right answer for your student. Several different solutions can work out very well, given your student and your circumstances. That's the beauty of financial aid. It can create options. If your student is interested in, for example, colleges in Massachusetts offering Criminal Justice, consider private colleges such as Stonehill College and Northeastern University as well as Westfield State. Compare the aid awards, and then make the decision as a family. Better to explore all options than to regret what might have been.

Myth 2: Financial aid means loans and a job, so why bother? It is true that financial aid from the federal government is largely limited to loans and a job on campus for most middle -class students who qualify. Unless your daughter has a 90-mph fast ball, it's also true that public universities give primarily federal aid.

At private colleges, though, federal aid is typically only a small part of total aid available. Private colleges use money from their endowment to fund grants. Grants are outright gifts of money based on your financial need.

Myth 3: Only exceptional students get grants. Since grants are based on need, many students are eligible to varying extents. The more a school wants your student, all other things being equal, the more generous the aid package will be. Target a place where he/she'll be in the top 25 percent of entering freshmen academically. Money will likely follow. Keep in mind that every student can be exceptional at the right school!

Myth 4: The best school for your student is the most selective. There's an unwritten assumption, particularly in the suburban Northeast, that every student in the top two or three places in the class will be best served by a Harvard education. Although you're the one responsible for parenting, which includes paying for college, you'll get pressure from unexpected sources. People will pressure your student to attend his reach school, if he's accepted. Sources of pressure may include the high school, his friends and their parents, and your parents.

As the parent, your role is to help with the selection of an affordable college that will challenge and nurture your student, helping the student realize his/her potential. Not only do you need to pay for college, but also for retirement, which is looming. For example, your student might get a lot more money at Drake University than at Middlebury College, Your student might also get better grades for graduate school in the bargain. Use your wisdom to help with the decision.

Myth 5: All schools use the same formula and give about the same aid. Wrong! Aid packages vary considerably, the biggest differences showing up in the distribution of institutional grants in private colleges.

Federal financial aid is awarded on more or less the same basis from school to school because the awards result from the Federal Methodology calculation which Congress developed. Congress makes substantive changes to the formula every five years and cost-of living adjustments annually. All colleges use the Federal Methodology in calculating a student's Stafford Loan eligibility, for example. Federal aid is very similar from school to school.

Aid packages at private colleges vary because the Federal Methodology does not restrict they dispense their own money. Even though institutional methodologies do vary from college to college, they track the Federal Methodology closely. However, two exceptions apply almost universally: #1. In making decisions about disbursing their own money, most private colleges do count home equity. #2. In addition, most private colleges expect students to contribute about $1500 from their summer earnings.

Myth 6: The house doesn't count. See Myth 5. I'm mentioning this twice, because it confuses almost all parents. Most private colleges do count the house before they'll give out their own money. (They're much more generous with Federal money, it's true, and don't count the house in that calculation.) Typically, they look at the equity you've built up, add it to your other assets, subtract an asset protection allowance of about $40,000 from the total (the figure is based on the age of the older parent), and multiply the remainder by 5.64 percent. That's how they count the house.

Myth 7: It's part of growing up, my kid will do it. Are you really expecting your student to take charge of the family finances as a sophomore and figure out how to pay for college? As a junior? As a senior? It won't happen.

Busy parents sometimes operate as if they believe their student will learn how the Alice-in-Wonderland world of financial aid works -- perhaps in the high school guidance office -- and all will be well. This is the same student who's busy getting good grades, enhancing his curriculum vitae with extracurricular activities, practicing a sport after school every day, taking occasional time out for social interactions, keeping his room clean, and working and saving money for college. Not to mention studying for SATs, opening voluminous mail from colleges, and trying to figure out what to do with his life.

Who's going to be signing the checks? Enough said. Even if your student is destined for a doctorate in accountancy, do it yourself. You know the intricacies of family finances, you know your hopes and dreams for retirement. With the annual cost of selective private colleges at $31,500 this year, preparing pays. The difference between taking action early in your student's high school years and waiting till after college acceptances have been received may be tens of thousands of dollars.

Start by finding out what you need to do to lower your cost of college. Some of these steps will be financial, others will involve wise college selection.