DAVID GRAHAM FOR TIME THE BEST OFFER Lisa Hanon turned down Princeton because their aid package didn't approach the one Ursinus College tendered

Perhaps the only challenge more daunting than getting into the college of your choice is figuring out how to pay the bills. Just consider: four years of tuition, room and board at the average public college cost about $45,000, according to the latest College Board figures. Four years at a private college can easily exceed $100,000 — not even including cash for the occasional late-night pizza.

There's no reason to panic if you don't have that five- or six-figure sum on hand. Fortunately, plenty of financial aid is available; a whopping $64 billion in federal, state and private aid was given out in the 1998-99 school year. To get your fair share, though, you have to know how to play the financial-aid game, which has changed dramatically over the past 10 years. "Financial aid has become a free-for-all," says Bruce Hammond, a college guidance counselor and author of Discounts and Deals at the Nation's 360 Best Colleges. "But once you understand the rules, you can get money you need."

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First, though, you should understand why financial aid has become such a challenging process. For starters, look to Washington. As tuition has soared, government aid funding has not kept pace, thus reducing the percentage of need-based aid available. To help keep college affordable, colleges are digging deeper into their own coffers to make up the difference. Even so, financial aid now consists mostly of loans rather than grants. For example, back in 1980-81, only 41% of aid came as loans; the rest consisted of grants, which need not be repaid. Today the figures are reversed — last year nearly 60% of aid was given out as loans, compared with some 40% in grants.

Meanwhile, as more high school students apply to colleges, admissions and aid packages have become more competitive. Fewer colleges meet full financial need for all their students, instead using aid packages to recruit those most desirable. Many education experts complain that financial aid has become part of a talent search, with colleges upping the ante for top students and shortchanging many needy families.

For the average student, it is increasingly difficult to predict what kind of aid package might be offered by any particular school. "College tuition is probably the second largest expense a family might have, next to buying a house," says Michael McPherson, president of Macalester College and a critic of the current financial-aid system. "Yet you have to go through the whole process without knowing what you'll really have to end up paying until May 1."

Make no mistake, though — a college education is still the best investment you could ever make. And by keeping the following guidelines in mind, you can make the most of the deals that are out there.

Scope out the best opportunities

Each college has a financial-aid policy geared to its degree of selectivity and the size of its endowment. As you might expect, the most élite schools — including the Ivy League — have the most aid to give away. This group, by and large, attempts to meet the full financial need for 100% of its students. Increasingly, these schools are focusing on retaining middle-class students whose families earn $50,000 to $100,000 and often fail to qualify for need-based aid packages. Several schools have altered their aid formulas to reduce the burden on the middle class. Princeton, for example, announced that it would no longer consider home equity an asset in calculating financial need — a move that could save families thousands of dollars. In addition, the school awards grants rather than loans to families with incomes of less than $40,000.

Further, the College Scholarship Service — the College Board division that collects data used to determine need for many private colleges in awarding their own aid money — recently revamped its formula, which cuts some families' expected contribution. Among other changes, the new formula assesses only 25% of assets held in the student's name, compared with 35% previously; and 5% of assets saved in the parents' names, vs. the old level of 5.65%.

To compete with the well-heeled Ivy League, second- and third-tier colleges generally use a system known as discounting. Essentially, these schools lower their sticker price for students they want to attract by awarding them academic scholarships, also called merit awards, as well as need-based aid. Figures from the National Association of College and Business Officers show the average private college or university is giving back 37.3% of its published price as financial aid to freshmen. That's up from 27.7% in 1990.

You might think these schools should simply lower their tuition price instead of offering discounts. But there's a reason for their selectivity: colleges use financial-aid packages as a form of social engineering to create diverse classes or recruit students who can fill vacant spots — a tuba player, for example, or field-hockey goalie. And of course, many colleges, both public and private, tender attractive offers to high-scoring students who can raise the institution's average sat scores — and reputation.

Some deals are too tempting to refuse, even if it means forgoing a more prestigious school. Lia Hannon of Willingboro, N.J., for instance, passed on Princeton to accept a generous aid offer from Ursinus College in Pennsylvania. Hannon, a varsity lacrosse player who ranked fourth in her public high school class, did not qualify for federal need-based aid. Princeton offered her only a $3,000 grant and a $2,625 Stafford loan. By contrast, Ursinus weighed in with a hefty $23,600 academic scholarship — all grants and no loans — guaranteed for all four years. "I was just another student at Princeton, but Ursinus showed an interest in me," Lia says. "Ursinus wanted to know how they could fit my needs."

Figure out where you stand

It's important to get a rough idea of how your aid application will be rated by the colleges that interest you most. Although academic superstars may qualify for scholarships from many private schools, need formulas still determine the amount of federal aid anyone receives. And the élite private schools award their own money based mainly on financial need. So don't wait till the last minute; the sooner you know what you're expected to pay, the more time you have to develop a strategy.

To get an estimate of your expected family contribution (EFC), you can fill out an aid worksheet or use the calculators online at finaid.org or collegeboard.org. Federal aid will be based on the so-called federal methodology, and your estimate here should be close. Private colleges, however, calculate need using a different formula, the so-called institutional methodology, and many use their own variation, so your EFC under those rules is harder to estimate.

Once you have a notion how you rate financially, you can compare colleges to see where you might qualify for the best aid packages. The key is to figure out where you will be most in demand. "At the most prestigious colleges, you may be in the middle of the pack and receive little aid," says Jayme Stewart, a college counselor at York Preparatory School in New York City. "But if you take a small step down in prestige, you may be considered a real find and offered a free ride." For some students, a seemingly more expensive private college may cost less than a public school. "If a private college wants you — and you fit into their aid formula — you are likely to get a generous package," says Susan Weingartner, a counselor at Francis W. Parker, a private Chicago high school. "But a public university, which awards mostly federal need-based aid, may not have the flexibility to give you the money you need."

To maximize your chances for aid, most college counselors suggest applying to between six and 10 schools. You'll want one or two to be financial "safety schools" — where you are very likely to be admitted and given the aid you need. How to identify a safety school? Carol Loewith, a college counselor in Fairfield, Conn., suggests asking your high school adviser about the acceptance rate and aid packages at various colleges for students from your high school. Then zero in on colleges where your academic record outshines that of previously admitted students. Consider both public and private schools of varying sizes and in different locations. "The competition is getting stiffer, so you have to be flexible," says Francine Block, a college counselor in Holland, Pa. "And think about a state school, which may be more affordable even if you don't get aid. Many top students are going to state schools in order to save money for graduate school."

Nicholas Ferris, a high school student in Baltimore who scored 1,520 on his SATs, says, "I found out that University of Maryland Baltimore County had one of the best computer programs in the state. It's relatively inexpensive, and when I look at graduate school in four years, I won't be deep in debt." Far from it — at UMBC, as a low-income student, he was offered a full scholarship, including tuition, room and board, plus a $1,000 stipend. "They're paying me to go there," says Ferris.

Don't apply for early decision if you really need financial aid. You'll lose any chance of leveraging an offer from another school. And once the college has your commitment to attend, it has little incentive to give you the highest possible aid offer.

Bargain for the best deal

Once you've been notified of an award, take a close look at exactly what you're being given. "Financial-aid award letters can be very misleading," says Greg Phillips, head of Phillips Financial Aid Services in Pittsburgh, Pa. "More than 50% of the letters I've seen tell you what you're being awarded, but they don't tell you how much you actually have to pay." You also need to know whether the offer is renewable and under what circumstances. What grade-point average do you have to maintain? Do you still receive aid if you spend a semester abroad? Call the aid office and discuss any points that aren't clear.

It's no secret that bargaining over aid is an expected part of the process. So if you feel your aid offer is inadequate, don't hesitate to let the college know. Carnegie Mellon, for example, has long stated that it will match any other school's aid offer for an admitted student; even Harvard has said students should bring rival offers to its attention (though it doesn't promise to match). At Washington University in St. Louis, Mo., roughly 10% of the 2,500 students admitted with aid packages appealed the initial offers this year, according to financial-aid director Bill Witbrodt; nearly 90% received some improvement in their aid package.

Be reasonable — as well as courteous — if you decide to appeal the offer. Financial-aid officers suggest writing, faxing or even e-mailing your concerns — phones are usually ringing off the hook, and you will have to send any documentation in writing anyway. Explain clearly why you feel your aid is too low, offering any financial data you think the aid officer overlooked, or listing changes in your family finances that have not yet been reported. Are there medical expenses that were not included? A recent job layoff? If you are presenting a rival's aid offer, don't expect the college to budge unless the offer is from a school of equal or superior quality — and it will still help to demonstrate why you need the additional money.

If the college really wants you, it will respond. Last year, for instance, Anthony Truong, a top high school senior from Alhambra, Calif., was awarded $24,000 in scholarships and loans from Occidental College. A great offer — but Truong, the son of Vietnamese immigrants and the oldest of six children, still felt it would be a stretch to attend. So he wrote to the financial-aid office and simply asked if the school could do any better. The college replied that it was giving him an additional $3,000 Pell grant and cutting a no-interest $4,000 loan to $3,000. "Financial aid was a very important part of my decision," says Anthony. "My family is low income, so it had to be."

Still, remember that when it comes to your college education, financial aid isn't the whole picture. The quality of the school and how well it suits your academic and career goals are just as important. "The right college for you may not be the one offering you the most money," says Phillips. "If you end up having to change schools, or if you take five or six years to graduate, then it's not such a great deal." But with the right strategy, you'll end up at a great college that is also affordable.

Source: TIME/The Princeton Review's The Best College For You 2001