It never ceases to amaze me what my friends spend to raise their children. Between the child care, private schools, food, and clothing, it’s no wonder that in so many families both parents work. The Department of Agriculture estimates the average cost of raising a child born in 2012 to age 18 at $241,080, or $301,970 if you factor in inflation. Shockingly, that doesn’t include the cost of a college education. Parents in big coastal cities spend far, far more. In the New York area, some parents spend $19,000 a year on nursery school! Yes, parents have it hard. And then, just as they should be doubling down on retirement savings, they face the hefty and growing tab for college. Average tuition costs at the nation’s universities are rising at a steadier clip than any other consumer good in the economy. Public (in-state) annual college tuition averaged $8,655 in 2014, and in out-of-state public colleges it averaged $21,706 each year. Attendees at private four-year colleges paid even more: $29,056 on average. But tuition is just the beginning of your nightmare. Housing, food, textbooks, beer, and pizza can double tuition costs. Your total four-year tab can easily stretch into six figures. The average total costs at the most expensive private colleges and universities can run close to $65,000 a year. When I was in college, my work-study earnings helped my family close the affordability gap, but that’s hardly possible now.

Parents are in a panic. My friend Allison says that when her oldest daughter entered high school, she started waking every night with the same nightmare. In it, her daughter attended a local college for four years, but when it was time to graduate, she was denied her diploma because Allison couldn’t make the last tuition payment. She’s not alone in panicking over college costs.

If you’re worried you can’t afford the education you feel your child or grandchild deserves, read on. In this chapter I’ll get to the bottom of how liberal progressive policies have pushed the price tag out of reach and what you can do to finesse college aid officers and the system to get a quality education for your family. You’ll learn how to navigate the bloated academic-industrial complex (as I call the higher education system) and pay for college without going broke.

Strangely, a college education is the only thing I know of that our society has agreed should have no cost constraints. People balk at paying $4 for a gallon of milk, but a $150,000 tab for an Ivy League education is just fine. Average annual tuition inflation perks along at 3 to 4 percent above the broader economy’s inflation, and that means that even if you start college planning when Tommy is a toddler, your actual costs may be far different from what you anticipate. Over the last 30 years, tuition costs have risen 1,120 percent while healthcare has gone up just 600 percent and housing has risen 375 percent. The Pell Grant, a $5,500 per semester federal award for low-income families originally designed to pick up most of the tab for school, today barely makes a dent in college costs. An education is 12 times more expensive than it was 30 years ago. Things have gotten so out of hand that several states offer aid to middle- and upper-middle-class families. California offers to foot 40 percent of the education tab for families earning up to $150,000 a year, and in Minnesota families earning $120,000 can get $5,000 in aid.

The toll on American families is heavy. Total student loan debt for the country is $1.2 trillion, and the average grad entering the workforce after graduation in 2014 carried a debt load of $33,000, an all-time high. Paying back that debt is forcing grads to delay marrying, having children, and buying a first home. Fifty-one percent of student loans are in deferment or forbearance, which means that the borrowers have agreed to pay the debt later, after even more interest costs have accrued. In other words, students are digging themselves into a deeper and deeper debt hole. These days, though, it isn’t just the grads who are at risk. Mom, Dad, and even grandparents find their pockets tapped. People over 60 hold $36 billion in college debt, and it’s this age category in which debt is growing the fastest.

Economists say that prices in any marketplace naturally reset lower when buyers evaporate because of high costs, but that hasn’t happened in higher education. Why not? By far, the biggest reason college costs have skyrocketed is the easy money available to students and parents in the form of government-guaranteed student loans. For that reason, higher prices haven’t taken customers out of the system. If you can fog a mirror, you can get up to $12,500 every year in student loans. The government requires no credit checks on applicants. None. This makes for a rising tide of tuition dollars for schools. Not surprisingly, college administrators opt to raise prices. And for that reason, more and more students find it easier and easier to take out loans not just to cover tuition and books but also to pay for rent, beer, and pizza under the federal category heading “living expenses.” Consider the case of the 30-year-old Florida sales clerk who enrolled in a community college so that he could get student loans, using them to pay rent to a relative, finance his entertainment, and pay his cell phone bills while he attended community college part-time. This was his second go-round. He’d already gotten a degree in public relations using student loans but hadn’t been able to find a job in that field. Now, by staying in school he could delay repaying his first loan while accruing more debt. At last check, he was studying to be an actor. This would be funny if it weren’t so tragic. He says he needs to stay in school to make ends meet, but clearly he is delaying the inevitable next step of paying off his escalating debt.

Think abusing the system is uncommon? Think again. As the economic recovery failed to provide job opportunities for grads, more and more of them opted to spend more time in school and borrow more money. Online students, according to a report from the Department of Education’s inspector general, are the worst culprits. According to the report, some 42,000 students received an average of $5,285 from online schools in loan money even though they weren’t logging any credits at the time. A lot of this overborrowing is the result of fraud, but according to Edvisors, in 2011 about a quarter of students took out loans that exceeded their tuition by $2,500. Sixty-eight percent of all undergraduate borrowers hit the annual loan ceiling, up from 60 percent in 2008.

The solutions put forward by Obama’s administration only double down on debt as the solution to rising college costs. The most pernicious is the student loan forgiveness program called Pay as You Earn. The program expands debt forgiveness for students who meet income eligibility standards. The rules go like this: You pay 10 percent of your discretionary income for a maximum of 20 years. Discretionary income is defined as the amount you earn above the poverty line for your family size. If the borrower’s job is in public service, government work, or nonprofit work, he or she pays only for 10 years. After that, the debt simply disappears. Poof! Or that’s what the liberals would like you to believe. Truth be told, it doesn’t disappear. The debt becomes part of the federal debt to be paid for by taxpayers. This fact came sharply into focus in February 2015 when readers of the president’s budget realized that his new forgiveness program already had resulted in a $21.8 billion deficit in the student loan program, a debt bigger than the annual budget for NASA or the EPA. Over the next decade, the program is expected to add another $250 billion to the nation’s deficit. Sadly, there is still no free lunch.

The same goes for the president’s idea of giving every American child two free years of community college. That $20 billion proposal, which was shot down almost as soon as it was proposed, would guarantee two free years of education for students, essentially expanding government-funded education from kindergarten through a two-year degree. Although the president said he envisioned a program accessible to any student willing to “work for it,” the standard for participation was set low at a 2.5 grade point average. Even education experts scoffed at this idea, saying that community colleges don’t have the capacity to handle an onslaught of new students. Further, according to Robert Archibald, Chancellor Professor of Economics at the College of William & Mary, such a program ultimately could empty classrooms on university campuses that rely on tuition dollars from undergrads who fill larger first-year and second-year classrooms to keep costs down. Wouldn’t that lead to even higher tuition on conventional campuses? As with so many Obama programs, the negative unintended consequences are punishing.

Now, you might be thinking that loan forgiveness or free community college ultimately would be a positive for students by reducing their debt burdens. If Rich Is Not a Four-Letter Word is on the side of students, shouldn’t we support it? The fact is, I’m on the side of the whole family. Ultimately, Obama’s programs would raise the costs of government for taxpayers while making Uncle Sam more intrusive in our daily lives. Who is to say that a government funding education might not decide to limit what you could study? Remember, the current administration plowed taxpayer dollars into solar panels at a time when opportunities were slim. I think it’s highly likely government would back curriculum choices that would similarly favor trendy, of-the-moment technologies that might or might not bear fruit in the long run. What’s more, some parents may not want to choose two years of community college. Why should their desires be ignored? Choice is an important part of education. The president’s one-size-fits-all solution just doesn’t satisfy on any level.

None of his education proposals, though, were more confounding than his idea to eliminate the tax benefits of 529 college savings plans. Expanded under President George W. Bush, the savings accounts allowed parents to set aside money for education and withdraw that money without paying taxes when it was used for education expenses. This program promotes college savings by families instead of encouraging them to find a government-based solution. The savings aren’t guaranteed by the federal government as loans are, but the government keeps its hands off the proceeds to encourage Americans to save. When Obama proposed taxing these accounts as part of his 2014 State of the Union plan to assist the middle class, he described 529s as a perk of the elite. But the facts argue otherwise. If the accounts had been the preserve of the elite, you would have expected their total numbers to be small and the average account balances to be high. Yet when the president attacked 529s, 7 million families maintained accounts, with an average balance of $19,774. Seventy percent of 529 plans were owned by households with incomes below $150,000. Average monthly contributions were $175, hardly the way Richie Rich’s trust fund ran. The outcry against Obama’s attack on college savings was sure and swift, and the administration quickly pulled back the proposal. Thank goodness!

Despite all the nonsensical ideas coming out of Washington, real solutions are being employed successfully all over the country to combat the high cost of education. When Mitch Daniels, the former governor of Indiana, took over as president of Purdue University, he froze tuition, a rare move and one especially foreign to the West Lafayette, Indiana, campus, where tuition had risen in each of the previous 36 years. When I interviewed Daniels, he told me he took a red pencil and eliminated spending on “low hanging fruit, commonsense things.” “Purdue is no different from a lot of other universities,” he said. “They raised prices because they could.” He changed the campus health plan to a less expensive option and managed the university’s cash more efficiently. Everything was evaluated. A fleet of 10 school cars was sold (about $10,000 each), rental storage was cut in half ($160,000 saved), and office furniture was reused instead of replaced ($28,000 saved).

As a result of his paying closer attention to costs that didn’t affect education, the overall cost of attendance at Purdue went down for the first time on record. The cost of meal plans was cut 10 percent, and room rates flattened. A partnership with Amazon allowed Purdue students to save $25 million on textbooks over four years. Student borrowing declined 18 percent after borrowers were counseled about the dangers of debt. Even more impressive is the fact that it took Daniels just 19 months to make those changes.

The experience at Purdue should give you hope that the winds of change are blowing. But most parents and students still struggle with the academic-industrial complex. Unlike almost any private sector business, the nation’s colleges and universities are bloated with costs, many of which have little to do with providing quality education. Even Purdue has 75 percent more administrators and staff on the payroll than it did 13 years ago, and it’s not alone. According to Richard Arum, the coauthor of Academically Adrift, a serious critique of the education establishment, the fastest-growing category of professional employment in higher education is nonfaculty support professionals, in other words, bureaucrats. Compensation for the paper pushers is growing. On average, college and university presidents’ compensation is about $500,000, with many making $1 million a year. That kind of pay inflation leads to $800,000 pay packages for provosts and $500,000 deans.

Surely, you may think, all this spending means the level of instruction has gotten better? Not so much. Students have less and less access to the brains of the game: professors. Only 40 percent of students are being taught by tenure-track instructors. Despite a wave of federal funding, recent government reports show that the proportion of full-time instructional faculty declined from 78 percent in 1970 to 52 percent in 2005. Professors spend less time teaching and preparing to teach or advising students and more time writing and researching. Arum says the average time dedicated to students is just 11 hours per week. Students’ performance reflects their effort. Today’s full-time college students spend just 13 hours a week studying compared with 25 hours in 1961 and 20 hours in 1981.

More and more of the billions of dollars in rising tuition fees is spent on things that won’t advance the education experience. Instead, the money is frittered away on elaborate student unions, workout facilities with “lazy rivers,” and showcase campuses. “It’s an academic arms race,” says Richard Vedder, who directs the Center for College Affordability and Productivity and teaches economics at Ohio University. Schools increasingly compete for the best students by installing the most attractive infrastructure. Says Vedder, “Even classroom buildings have to have atriums; if not, it’s downscale.” There are schools that do laundry for their students or offer valet service for students who need to get to class ASAP. Is it any wonder that students are highly satisfied with their experience on campus? Surveys show a satisfaction rate of 90 percent. Who in her right mind would ever want to graduate?

Maybe this would be acceptable if students were emerging from school better prepared for the workforce and more grown up, able to reason, write, and, in short, lead. The facts, though, tell a different story. Arum reports that a third of students gain no measurable skills during four years of college. None. He came to these conclusions after surveying 2,000 students in the largest study of its kind, tracking those students through college and into the labor force and measuring their abilities for critical thinking, complex reasoning, and writing. It’s no surprise, then, that despite laying out tens of thousands of dollars in tuition and living expenses, many students can’t get or keep jobs. More than 115,000 janitors have bachelor degrees, says Vedder, who estimates that a million retail clerks are in the same boat along with 15 percent of taxi drivers. “We’re turning out too many anthropologists and not enough truck drivers,” he says.

NO MORE THAN FOUR YEARS

Why am I cataloging the many failures of today’s higher education system? Because if you’ve been busy raising children for 18 years, you may be unaware of how much college campus life—its costs and payoffs—has changed. You need to know what you are up against. Too many parents are simply ignorant of the problems. When I talk to mothers about the process of choosing a school for their son or daughter, I often get a misty-eyed response. Parents are more prone than their potential college students to romanticize the process, imagining a Love Story world in which their offspring will engage in Socratic debate by day and hole up in the library stacks at night. That’s not what’s going on today on campus. Mom and Dad need to get with the program and realize the financial cliff they may be walking off if their child performs even close to norms. If there is only one number you remember from this chapter, it should be this: just 39 percent of college students graduate in four years. After five years, 55 percent of the average class has gotten a sheepskin, and after six years, it’s only 60 percent. Each year you wait for Joanie to graduate, it’s another $23,000 or so out the window. Job number one for Mom and Dad is to make sure that their matriculating college student knows that the slow train to a degree is not one they are going to take. If you want your child or grandchild to be surrounded by students eager to complete a degree, check out the Chronicle of Higher Education’s website and its college completion calculator. There you’ll learn whether the schools you’re targeting have a good track record of graduating students in four years.

To ensure that your child graduates in four years, your prospective student should have some idea of what he or she wants to study. Sampling multiple fields is a waste of time. Prospective students should be narrowing their choices in high school with part-time work and internships. As a high school student, I learned a lot about media by writing a column for my local newspaper. The worst scenario is when the parent picks a course of study for a student. One family I know tried to force a young man into prelaw. His father believed a law degree was the route to success and riches. Unfortunately, his son was not interested in pursuing a law degree or any degree at all. After flunking out of two schools, he trained as a paramedic and firefighter and ended up pursuing a highly successful career serving his community. He’s the most popular guy in town and happy to boot. Unfortunately, Mom and Dad had to pay the price for that lesson. Bottom line: watch out for the square peg, round hole problem. It can be expensive.

Getting value for your dollars when it comes to education means taking off the rose-colored glasses and realizing that even though many of these colleges and universities are covered in ivy, they are businesses determined to separate tuition dollars from your wallet. No college administrator is going to stop little Johnny from stretching out his undergrad experience another year or two, and Purdue’s program of advising students to take on less debt is not the norm. Think of the student aid officers you talk to as the college’s first line of defense. Their job is to give you the least amount of money they can in grants and scholarships and still get your child in the front door. Because student enrollments are down and acceptance rates (except at the elite colleges) are up, the real hurdle today for parents isn’t getting their children accepted to college but paying the enormous tab.

WHY YOU SHOULD IGNORE THE STICKER PRICE

Finally, some good news. Even if your son or daughter has his or her heart set on an expensive Ivy League school, such as Princeton, or Stanford, the price published in university guides may not be the price most students at that hallowed institution are paying. The average grant to freshmen at Princeton is $35,700. That’s free money! At MIT the freshman grant averages $36,200, and at Stanford it’s $40,500. Similar gaps between published prices and reality exist at many of the nation’s colleges and universities. In fact, Rob Franek, an author and the Princeton Review’s senior vice president, says that only a third of students pay full tuition costs. Don’t regard the eye-popping tally of frosh costs your son or daughter handed you as the last word. In fact, it’s more like the sticker price, the suggested payment that college administrators hope you fall for. Paying for college these days isn’t a matter of making good on their wish list but putting one together that works for you. The bottom line here is that you should not drop all the expensive colleges from consideration, because you may get a great financial package from one of them. How much debt should your son or daughter be willing to take on? Most experts say that newly minted grads shouldn’t enter the workforce with more than the amount of their starting annual salary in student loan debt. I know this sounds impossible, but here’s how that calculation works: It will take your son or daughter 10 years to pay off debt equivalent to his or her starting annual salary. If the debt is twice that salary level, it will take 20 years to pay it down.

The reality for many college administrators is that they are competing mightily for a declining number of students. Enrollments in 2012 fell by half a million students for the first time since 2006, according to the Census Bureau. That means you have leverage when it comes to your total tab. In today’s environment, don’t assume a large state or public school is the best option. Even with a higher sticker price, a small private school may give your son or daughter more free money. In fact, according to the National Association of College and University Business Officers, 70 percent of all grant aid to undergraduate students attending a private nonprofit college was provided by the schools. However, be aware that some schools are facing financial shortfalls. More than one expert in higher education finance has told me that a small number of the nation’s 4,495 degree-granting institutions may not be around in four years because of declining state funding and enrollment. The last thing you want to do is pick an institution because of its great aid package only to find out it’s not open the next year. And watch out for a new tactic used by out-of-state public schools. With federal aid dollars dwindling, they are looking to make up the difference by admitting more out-of-state students who pay higher tuition bills. That “safety school” plan you envisioned may need an update.

If you’re searching for a budget school, look beyond the best-known names along the coasts such as New York University, Emerson, Santa Clara, Northeastern, Marymount, and American. These schools are expensive, and their financial aid packages are often poor. Look for colleges that are not situated in urban areas. There are great deals to be found in the Midwest, Mid-Atlantic, South, and Interior West.

Fortunately, there are lots of published analyses of colleges and universities that can help you evaluate your choices with data that allow you to compare universities with one another on a variety of measures. Junior may be scouring the list of party schools, but you should be checking out metrics such as per capita spending on education (instead of sushi and climbing walls), freshman retention (some schools, such as MIT, have high first-year dropout rates), and graduation rates (no six-year degrees). These statistics are published in U.S. News & World Report’s annual college rankings report. One of my favorite metrics is the return on investment (ROI) published by the Princeton Review. Just as businesses and investors consider ROI in choosing an investment, potential students should consider how well graduates of their favored institution perform in the real world, says the Princeton Review’s Rob Franek. Top ROI colleges include Harvey Mudd in Claremont, California, where grads earn median salaries of $73,300 out of the gate. Grads of Cooper Union for the Advancement of Science and Art in New York earn $61,300 on average. A lot of this advantage has to do with the field of study students at those institutions choose. Harvey Mudd is known for its science, engineering, and mathematics programs. In programs in which students study art, music, and design, starting salaries are significantly lower.

WHY YOU SHOULD FILE THE FAFSA

Once you have a short list of potential schools, you’ll want to get a feel for how much free money you quality for. The building blocks of a typical financial aid package are the following: federal need-based grants, work-study funding, and subsidized Stafford Loans. Subsidized means the government pays the interest on your loan while you are in college. Plus, there are merit-based scholarships offered by the institutions themselves. There are also unsubsidized federal loans and parent PLUS loans for Mom and Dad. The last of the list are private loans offered by banks. Generally, the farther you travel in this laundry list, the more you pay in interest and fees. Two-thirds of college students take out federal loans. For that reason, keep in mind that some are more advantageous than others. Exhaust federal loans first because they lock in the interest rates. Stafford is the best of the bunch. Your rate is locked in for the life of the loan but can be readjusted each summer for new borrowing. To be considered for any of these options, you have to fill out the Free Application for Federal Student Aid (FAFSA). Unbelievably, one study showed that 53 percent of eligible families did not bother applying for aid through the FAFSA, leaving millions of dollars on the table. Many parents I talk to believe they aren’t eligible for aid because they make too much money, but rising college costs have changed the equation. In fact, at current tuition levels, most families qualify for some type of aid.

Schools use the FAFSA to determine the gap between what a family can afford—called the expected family contribution (EFC), which I will talk about later—and the school’s tuition. That’s how schools determine whether a student should receive needs-based scholarships, or free money. To get the best results, start early, way early. According to Kal Chany, author of Paying for College Without Going Broke, parents should think about college planning the way they think about tax planning. He suggests applying for aid as early as when your child hits the ninth or tenth grade of high school to get a sense of how you fit in.

WAYS TO REDUCE YOUR EXPECTED FAMILY CONTRIBUTION

Admissions lingo is full of jargon, but the most important term may well be your expected family contribution, which is what you are expected to pay. You don’t decide this. As I said earlier in this chapter, the FAFSA is the tool schools use to determine the gap between what families can afford and a school’s tuition. This is a number that savvy families manage just as surely as they manage their federal tax bill. The goal is to bring the number down, which in turn will increase the likelihood and size of any free money going to your future student. A good first step is not saving money in your child’s name, but you can also take more dramatic steps to get more free money. Administrators scour your family’s finances in the year you apply for admission, and typically that means a review of your finances from the tax season before. When you’re under that spotlight, try to avoid any actions that could raise your income and therefore the amount of money administrators believe you have available to pay them. To do that, adjust your tax withholding to minimize refunds. Avoid early distributions from retirement plans. Some older parents may find they have to take a minimum distribution from an IRA. If you do, take just the minimum if you can. Minimize capital gains and don’t cash in savings bonds in the years your income is being analyzed for student aid and loans (typically a year before you need the money). Some parents take college financial planning too far by turning down raises or even having a spouse quit his or her job. That is too extreme. Delaying a bonus into the next tax year makes sense, but turning down income does not. The goal is to minimize any discretionary income to maximize aid, not to make yourself poor.

Remember, the schools won’t tell you how to position yourself for the most aid. You have to be savvy about the process. Your expected family contribution should help drive your college choice. If your expected contribution is high, you should search for schools that give merit scholarships to wealthy students. If your EFC is low, look for schools that are generous with financial aid.

It’s not just parents who should be on the hook for financing a college education. Prospective students should contribute too. Working in college is a good way to discipline one’s time. Another way students can help is by applying for scholarships. Some college counselors urge students to apply for every scholarship imaginable, hoping some obscure fund will pick up a big part of Johnny’s costs. Truth is, lucrative scholarships attract thousands of applicants. A better option for many students is applying for smaller local scholarships awarded by community organizations such as a church or chamber of commerce. A free app to help you find scholarships that match your student is called ScholarshipAdvisor; it is available at the Apple iTunes app store.

Waiting for the acceptance letter and the financial aid package, which usually arrive in that order, is crunch time for Mom and Dad and the prospective student and typically a period of high anxiety. Most colleges will send out offers of admission anytime between March 1 and early April, and financial aid award letters arrive simultaneously or a few days later. The deadline for accepting offers of admission is typically May 1, what the schools call the National Decision Day. This gives you time to analyze offers and make comparisons between schools to get the best deal.

Some colleges have secure online portals they use to deliver the financial aid award letter instead of sending it by mail. Log in to the portal to check whether there are any messages waiting for you. Instructions may have been included with the admissions packet. If you are worried or if you have not received the financial aid award letter by mid-April, call the college’s financial aid office to ask when you should expect to receive the letter. Some colleges will include this date in a financial aid time line on the college’s website. After you receive the financial aid award letter, check whether you have to return a signed copy to the financial aid office. Some colleges require you to sign and return the letter within a week or two to accept the financial aid offer; others do not. The important thing here is to follow the rules. When it comes to college aid, deadlines matter.

Receiving the aid offer isn’t the same as understanding it. The next step is decoding the details of the aid offer letter to determine how much money you’ll be on the hook for, or your out-of-pocket costs. This sounds easy, but brace yourself. The letters are full of confusing jargon that is easily misinterpreted.

Consider an actual financial aid offer from Monmouth University in New Jersey that listed “alternative financing” of $8,865. Sounds like a handsome grant, right? It’s not. It’s a loan. Or consider the offer from the University of Arizona that included a “Wildcat T1” scholarship of $1,000. You’ve got to love free money, right? Nowhere does it say that the grant is only for the freshman year (T stands for “tuition reduction,” and 1 stands for “freshman year”). Even worse are the letters that mislead parents about the full costs. In fact, fully a third of award letters don’t even include the full cost of sending Junior to school. Yes, they include tuition and some fees, but major costs such as books, transportation, and living expenses are omitted or understated. That Monmouth University letter is instructive. It approximated total costs at $31,878, but in reality there was another $2,500 for travel and miscellaneous expenses and $900 for books that parents would have to contend with. The real cost was $35,000. The critical distinction you’ll be making as you read the letter is whether the money the college is willing to give you is a grant, which does not have to be paid back, or a loan, which clearly does have to be paid back. You’d think it would be easy to discern this from the letter, but unfortunately it is not. Checking directly with the admissions office is typically the most reliable way to make sure you understand the specifics of the package. When you do, make sure you understand the following key pieces of information: cost of attendance, grants, scholarships, loans (both student loans and parent loans), work study, and expected family contribution.

Next you’ll want to compare offers from different institutions. This is tricky, too, because the lingo that schools use is not standard among institutions. Some colleges call certain grants scholarships, which can be confused with government grants such as Pell Grants. You’ll want to find the net cost to you. Know that the letters include a net cost figure, but that often includes loans. Beware of student loans masquerading as gift aid. To get an apples-to-apples comparison, you’ll want to do the math on your own. Calculate a true cost of attendance and subtract grants, scholarships, and gift aid: money you will not have to pay back. Then compare these figures across institutions. One other caution: sometimes the very best aid package is given by the college in the freshman year to get a student in the door. In other words, the school may have no intention of repeating that lucrative package offered for the first year.

A free ride to college is a rare thing these days. If you are awaiting financial aid offers, you’re hoping for a grant windfall, but the reality is that you will have to beef up your package with loans. Here’s a list of the federal loans, their details, and their annual award limits.

FEDERAL PERKINS LOANS: These loans are available for undergraduate and graduate students. Eligibility depends on financial need and the availability of funds at the college. The college is the lender, and payment is owed to it. Undergraduates can get up to $5,500, and graduate students can get up to $8,000. Total amounts cannot exceed $27,500 for undergrads and $60,000 for graduate students.

DIRECT SUBSIDIZED LOANS: These loans are for undergraduate students who are enrolled at least half time and have demonstrated financial need. Interest isn’t charged while the student is in school. The U.S. Department of Education is the lender, and payment is owed to it. Annual awards are $3,500 to $5,500.

DIRECT UNSUBSIDIZED LOANS: These loans are for undergraduate and graduate students who are enrolled at least half time. Financial need is not required. The student is responsible for paying interest throughout the life of the loan. Payment is owed to the Department of Education.

DIRECT PLUS LOANS: These loans are for the parents of dependent undergraduate students and for graduate or professional students. Financial need is not required. The student must be enrolled at least half time and must be either a dependent undergrad for whom a parent is taking out a Direct PLUS loan or a graduate or professional student who is receiving a Direct PLUS loan. The borrower cannot have a negative credit history and is responsible for paying interest in all periods. The Department of Education is the lender. The maximum award is the cost of attendance minus any other financial aid the student receives.

SPECIAL SITUATIONS

So many mothers and fathers these days are on second marriages (or even third) that I thought it was worth discussing what you need to know about your expected family contribution when things get a little complicated. First off, student aid officers have seen everything, so don’t be shy or embarrassed. If Joanie’s biological mom does not want to contribute to college costs, tell the aid officer that fact. However, what the schools really care about is not who the biological parents are but who a child’s custodial parents are. What that means is that you must identify which parents the student lived with most in the year in which the institution is calculating your aid request. It’s that parent or parents whose financial information will be used to determine your expected family contribution. Thus, even if you just remarried in the year aid is being calculated, the school will look at the assets and income of your new spouse as well as yours to determine your expected contribution. A stepmother or stepfather is treated as a natural parent by aid officers. If you’re worried that a school will want to include your ex-spouse’s massive Wall Street income in the aid calculation form, rest easy. The vast majority of colleges and universities never even ask to see information about the income or assets of a noncustodial parent.

Some business owners are also concerned about aid calculation. Here’s what you need to know: for the most part, small-business or farm owners (defined as entities employing fewer than 101 full-time workers) don’t have to report assets on the FAFSA form. This is a big change in the law that went into effect in 2006 that should supply relief to those who qualify. This means that your business equity, which is calculated as the value of the business minus its liabilities, doesn’t have to be reported on the FAFSA and therefore won’t increase your expected family contribution.

APPEALING THE AID OFFER

In 2012, the average discount on tuition offered to incoming freshmen was 45 percent, an all-time high. Not everyone is offered that deal. What happens if you open the offer letter and are completely disappointed by the package from your dream school? One of the dirty little secrets of applying for the financial aid package is that you can appeal the school’s decision. Thirty percent to 50 percent of families that ask for additional money from private colleges and universities get it. The first offer may not be the best and final one. School bureaucrats will be offended if you call it a negotiation, but most schools have guidelines for appealing for more aid. Find out what the rules are and follow them to the letter. This is no time for a sob story. If you have a true change in financial circumstances during the year, it’s appropriate to ask for a new look at aid. Did Dad get laid off? Is Mom receiving expensive medical care? Include third-party documentation to support your case and include specific dollars amounts regarding any special circumstances. Remember, too, that many Ivy League schools will match needs-based offers from other schools. Any of these changes might cause a school to alter your aid package. Just don’t call your efforts to increase aid a “negotiation” or ask for a “bargain.” Instead, you want to “request a reconsideration of the aid that was offered.”

Once your son or daughter has submitted an application, make sure the school understands the seriousness of your student’s interest in attending. Now that students can apply to hundreds of schools with the click of a button, administrators don’t want to waste their time working on an appeal for a student who will never attend.

A note to students considering applying for early admission: this will reduce your leverage on aid packages. Just 460 of the nearly 5,000 degree-granting institutions out there offer early admission, but they are some of the most popular and best-known colleges and universities, and their numbers are on the rise. For example, Stanford University boosted early admissions by a whopping 24 percent, and overall, early admissions are 7 percent higher.

Making early application means getting the process started the summer before senior year. Students who do this say they want to get in early to relieve the pressure of waiting for college acceptance letters with fellow classmates. According to some reports, admission rates are higher for early applicants than for those who follow the usual application deadlines, but critics say that applying early may benefit colleges and universities more than the students. Usually, applying early means you must accept a college’s offer if it is made. For the school, that means locking in its pool of students early, and it gives the school an edge in the competition for the best students. But for high school seniors, it means less leverage at the negotiating tables when they are considering aid offers. It’s difficult to make the case for more aid if you don’t have any other offers to use as a bargaining chip with the student aid officer. If your college student is set on applying early, consider applying via “early action,” which allows seniors to apply to multiple schools without committing to one institution.

JUGGLING THE TAX BENEFITS

The most important tax advice I can give parents who are applying for aid is that if you think there is any chance of getting financial aid, don’t put any money in your child’s name. Although many tax strategies call for families to do this, I say it’s a mistake because federal aid assessment formulas will require that you put any money in your child’s name to work—immediately. The name of the game is keeping control over your money. According to those formulas, typically 20 percent of your child’s assets and 50 percent of the child’s income will be assessed in determining how much the child can afford to pay for school. For parents, those levels are 47 percent of income and 5.65 percent of assets. In other words, federal rules would require a $2,260 payment from a $40,000 college fund held in the parents’ name versus an $8,000 payment from a fund of the same size held in the child’s name. At that rate, your college fund will be depleted fairly quickly.

I’m a big fan of the 529 college savings plan, but using it exclusively could lead you to lose out on some major tax benefits. Americans have saved more than $221 billion in these plans that operate like IRAs except that you never pay tax on the proceeds of your investments. That’s the attraction of these plans. Your earnings grow while your child is in elementary and high school, and the distributions are tax-free if the money is used for qualified educational expenses such as tuition. But you can expand your savings dollars by using the following tax benefits. The first is the American Opportunity Tax Credit, which can reduce your tax bill by $2,500 for single filers making less than $80,000 and joint filers making less than $160,000. Remember, a tax credit, unlike a deduction, reduces your taxes dollar for dollar. The devil here is in the details. You won’t be able to use the tax credit for room and board, though you can use it for tuition. (Use your 529 savings for room and board.)

Another tax benefit is worth noting, but be advised that it has lower income limitations. The Lifetime Learning Credit can reduce your tax bill by $2,000, but it’s unavailable to single tax filers making more than $64,000 and joint filers making more than $128,000.

AVOIDING TROUBLED INSTITUTIONS

I mentioned earlier in this chapter that many of the college experts I tapped for information warned me that some colleges, especially private ones, may not be in business in another four years. It’s hard to imagine that with the high price of tuition schools aren’t luxuriating in massive budgets, but the truth is that a large proportion of colleges are financially stressed. The fact that a school is charging tuition and fees of $45,000 a year doesn’t mean it is getting it. The problem got national attention in 2015 when Sweet Briar College, an all-women institution near Lynchburg, Virginia, announced it would close its doors. The 114-year-old liberal arts college that started as a finishing school cited “insurmountable financial challenges” as the reason for an abrupt announcement that it would close at the end of the academic year (it subsequently announced plans to reopen). Students were angry and sad. According to reports, the college had been discounting tuition by as much as 80 percent. But financial woes aren’t limited to all-women colleges. Smaller schools have been merging with rivals for some time. Also, according to Moody’s, a bond rating agency, operating revenue for four-year schools is on the decline. Its 2015 list of 18 “financially stressed” schools included well-known institutions such as Bard College in New York and Marymount University in Virginia. To be sure, the Moody’s designation does not mean these schools will close tomorrow, but if you are looking for a school for your son or daughter to invest four years in, they are best avoided. Generally, the most troubled schools are ones that are smaller, are regional, and specialize in a narrow field of study. Getting your hands on a recent Moody’s report can be difficult, and its list isn’t complete as it follows only the top 500 schools. A better place for parents to check school financials is on the Department of Education’s annual watch list found on its website at www.studentaid.ed.gov. Here you can see a list of schools that have failed the department’s financial responsibility test. Another warning sign is when a private school’s average tuition discount is higher than 46 percent. Slashing prices demonstrates financial stress. Also ask whether the college is meeting its enrollment goals. Declining student body sizes also indicate trouble. Choosing a college or university is a decision that will affect your child for the rest of his or her life. The decision will affect not just the quality of children’s education but what kinds of jobs they land and the professional relationships they form.

KEEPING COSTS DOWN DURING YOUR CHILD’S FOUR YEARS

It’s easy enough for students busy with term papers and fraternity parties to lose track of how much debt they’re racking up in college. After all, payments don’t start until after graduation. For that reason, you’ll want to stay focused on your student children’s spending even if they aren’t. This means careful choices from the beginning. Last year, the average cost of room and board was $9,800 (for the school year 2014–2015), but you can shave some money off that tab by choosing your dorm wisely. Housing that is right in the center of campus is more expensive than rooms that are on the periphery of the action, and a longer walk will mean Johnny may be spared that extra “freshman 10” pounds of weight gain. Food is a big expense for students because the options are so varied. Food trucks park along busy campus streets, offering tasty but expensive options, and the dining hall these days is no slouch. Students can get custom-designed meals. Chefs whip up breakfast omelets and French toast made to order. International cuisine is all the rage, and I’m not talking about a mushy taco. Chinese, Indian, and Greek options keep students from getting bored. This is all very nice, but it bumps up the costs for students. College meal plans are pricey. One smart option is to buy a reduced plan and eat breakfast in the room. After all, Mom and Dad don’t eat breakfast out every day. At first blush, living off campus appears to be a far cheaper alternative. After all, splitting rent with roommates cuts your overall tab. But you’ll have to be just as vigilant about costs that can spiral out of control. Be sure to consider the costs of utilities (especially Internet service), food, and transportation to and from campus. And don’t forget to ask the landlord whether you can rent the place for 9 months rather than 12.

The only price rising faster than tuition is that of college textbooks. You can spend as much as $1,200 a year at a public college on textbooks and other supplemental materials required by professors, and some books cost as much as $300 if you purchase them new. Fortunately, there are new solutions that will allow you to drive the prices lower. The most expensive place to buy books, new and used, is at the college bookstore. On Amazon.com, a $300 book was $110. Online is the best place to go for texts. Here’s an example: An introductory psychology text recently cost $182 new and $136 used at the campus bookstore. On Amazon.com, the same book was $110. If you are buying online, use the ISBN number, a publisher identification code, to get the edition and title you’re looking for. You don’t have to limit yourself to Amazon and Barnes & Noble. Other good places to shop are AbeBooks.com and CengageBrain.com. CampusBooks.com will search multiple sites and help you find coupons or other deals. Those aren’t the only options. Ebooks can be cheaper than the real thing, and a Kindle or another tablet is lighter to carry around campus. Plus, ebooks are searchable. Renting a book may be the best option for titles that a student will use in the current semester and never look at again. Savings can be as high as 80 percent. Many booksellers offer a rental option. Also check out Bookbyte.com, eCampus.com, and Chegg.com. As another option, free textbooks can be downloaded to your personal computer at OpenStaxCollege.com, which also offers print versions for $30 to $54. The books are peer-reviewed and best used for introductory texts, especially when the professor teaching the class hasn’t authored his or her own text. Another option is buying an earlier edition of a textbook because the changes may not be substantial. In fact, in the example I gave of the psychology text, a previous edition of the paperback edition was available for just $4 online. By the way, there is always the college library for quick reads. If you’re reading every book ever written by Jane Austen for a course, for example, you might want to take out some of them from the library. Remember that college libraries will borrow texts from other schools if they don’t have a particular title on hand.

Another way to bring costs down is to get credit for courses that a student takes in high school. The way most students do this is through advanced placement (AP) curriculum and testing. Students sign up for advanced coursework in high school that is monitored and reviewed by the College Board, which administers and runs the SAT test for college admission. Students who take the coursework in high school can be granted college credits if they score well on AP tests. And that’s not the only way to test out of college classes. Jay Cross, who founded doityourselfdegree.com, says virtually any student can ask to take a College Level Examination Program (CLEP) test by contacting the college itself. Costs are low: less than $100 in most cases. Cross used this strategy after realizing he needed another 30 credits to finish his bachelor’s degree and finding the classes weren’t being offered by the Connecticut college he was attending. He says the most compatible fields of study for testing out of classwork are business, accounting, psychology, and computer science.

Once you’ve settled on housing, bought the books, and decided on the meal plan, you’ll have to consider how your child will handle out-of-pocket expenses. Credit card companies still hound students with card offers despite passage of the Credit CARD Act by Congress to discourage that practice. The law limited where card issuers could set up shop to market their wares, limiting them to more than 1,000 feet from campus or a school-related sporting event. The law also forbade these companies from handing out goodies such as gift cards and T-shirts. Trouble is, it seems card issuers have gotten smarter about promoting their wares. Beware! In my view, credit cards are kryptonite for students. Mom and Dad may think of it as an emergency get-out-of-jail-free card. A credit card, they rationalize, will allow their son or daughter to get out of a jam. Late getting back to campus from downtown? Take Uber. Need shoes or a shirt for the mixer? Put it on the card. You get the picture. A credit card may make Mom and Dad feel good, but for students it can be an easy way to lose any financial discipline. The average graduating student in 2013 faced $33,000 in debt from federal and state loans. The extra $3,000 that a graduating student owes in credit card debt doesn’t sound like much, but it is debt your child could do without. Why add to the debt your children already are accruing? Remember, $3,000 is a mountain to a graduating senior who is facing an entry-level job and the costs of relocating and setting up a household.

A better way to encourage your children to manage their expenses more actively and keep a close eye on what’s going on is to load a prepaid debit card with a monthly allotment for spending money. If you are familiar with my reporting at all, you know I have been a frequent and harsh critic of debit cards because initially they were a feepalooza for the banks that issued them. They also made a heck of a lot of money for the celebrities who endorsed them, such as Justin Bieber and, inexplicably, the personal finance guru Suze Orman, who eventually pulled out after enduring a raft of criticism. But the world of debit cards has changed. Competition is increasing, and big national banks have gotten into the business, using lower fees as a lure. Find a bank that has ATMs and at least one brick-and-mortar office near the campus your student is attending. Check to make sure monthly maintenance fees are $3 or less and there is no charge for accessing funds at an ATM associated with the bank. Best case scenario: You use your current lender and set up a special account you can monitor separately. You put money into the account each month, and your son or daughter lives within that budget. That way, if they don’t have enough money for going out to a movie at the end of the month, you and they know it’s time to rethink spending. Keep in mind that the last thing you want is to give your child a debit or credit card linked to your existing account because that could create problems in paying your own monthly bills as well as confuse both of you. You want clear accountability for spending, not a mishmash of funds. Some parents say they want their sons and daughters to establish a credit history in their names by opening a credit card account. My response is that it is wiser to wait until they’re employed full-time and can afford to pay the balance due.

KEEPING THE FAITH

It’s daunting getting a child through college, yet every year nearly 2 million students are awarded bachelor’s degrees. The truth is that American families are finding ways to make the seemingly impossible work. They are bringing down the cost of college and finding new sources for funding. My friend Patty, a single mom, just celebrated her son’s graduation from MIT. Although she’s far from wealthy, she didn’t qualify for a single penny of aid. I asked her how she managed the tab, which totaled $150,000, on her own. “I scrimped on everything,” she said. “There were no expensive vacations, no home renovations. I’m proud to say I made it myself.”

Patty knows what so many parents of college students have come to realize. Choosing a college or university is a decision that will affect your children for the rest of their lives, determining not just the quality of their education but what kinds of jobs they land and professional relationships they form. The stakes are high, but determined parents can help their children make smart choices.