How to Get a Better Student Loan Package

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With student loan debt exceeding a previously-calculated $1 trillion earlier this year, it comes as no surprise that students and their families are exploring every option to reduce the cost of college.

Student loan debt is often referenced as the country’s next crisis, and the amount of student loan debt has crept 16%  higher this year than previously estimated by the Federal Reserve Bank of New York, according to The Consumer Financial Protection Bureau.

Many students rely on financial aid to help cover their tuitions costs, but the paperwork can be hard to navigate. Students and families must understand the difference between “gift aid” (scholarships and grants) and “self-help aid” (work-study programs and loans requiring repayment), advises Haley Chitty, director of communications for the National Association of Student Financial Aid Administrators (NASFAA).

While it never hurts to ask a financial aid office for additional aid, students should understand that very few schools negotiate offers, and the schools that do have very strict policies, says Chitty.

“Negotiating financial aid awards is often misunderstood--many cases of negotiation are actually just circumstances where a financial aid administrator is exercising professional judgment,” he says. “Two similar schools offering different aid packages is often a case of one school having additional or more recent information about a unique circumstance. When the school with less or older information discovers the unique circumstance, they adjust their package.”

To help reduce the number of zeros on your student loan bill upon graduation, experts offered the following tips for students trying to make a case for a better student loan package.

Estimate the loan amount in advance. Students need to determine how much aid they will need to complete college. This figure should include the estimated total cost of the loan (principal, interest, and fees), and an estimation of monthly re-payments after graduation, explains Chitty.

“When it comes to gift aid, it is critical for students and families to understand any requirements that must be met to remain eligible for these funds.”

Apply early and follow up. Some state  and institutional aid may be limited and administered on a first come, first serve basis, and Chitty says students will be in a better position to receive aid if they turn in the Free Application for Federal Student Aid (FAFSA) as soon as possible.

Families should keep in mind that financial aid is calculated from the previous calendar year; for the 2011-2012 academic year, the base year is the 2010 calendar year.

“After they apply, it is also critical for students and families to check their email to ensure they receive any additional instructions sent by the U.S. Department of Education, state financial aid programs or the school they applied to,” recommends Chitty. “Whenever a student is in doubt about the status of their financial aid, they should be contacting the school’s financial aid office.”

Demonstrate need, especially with a change in family circumstances. Students will have a better chance of getting additional aid if they can demonstrate a need for it, especially if they can show a change in their family’s financial circumstances since filing the FAFSA.

“If there is a real, legitimate request that the application, which they submitted truthfully in the year prior, that picture of income and assets is no longer the case and that is unfortunately where we are today in the economy,” says Christine Emond of Emond and Berger, Private Wealth Advisors for Ameriprise Financial.

In this case, families should contact the school’s financial aid office to determine the eligibility for a change in status and bring documentation to support it, says Sue Riedman, vice president of marketing for Inceptia, a division of the National Student Loan Program.

Seek out aid that doesn’t need to be repaid. After exhausting all federal student loan options, students should seek out aid opportunities like grants and scholarships that don’t require repayment, says Riedman.

“It’s important to search for scholarship matching options through free tools like Many students are eligible for scholarships and may not realize it.”

How to Receive More Aid

For students with a case for additional aid, Emond suggests writing a letter explaining their situation in a clear, formal manner and ask for an in-person meeting with an advisor.

“Suggest that these are the circumstances and that you would be happy to provide documents and ask them to consider seeking a meeting where you could bring these documents that they could go over,” she says. “I think that an in-person meeting when you get to that point is so important.”

Although college can be expensive, Emond suggests that parents and students should make sure they have thoroughly done their homework to find the best options for their family situation.

“There is aid available and college still remains affordable if you are willing to take the time and really evaluate the programs and look at different schools and look at aid in a different perspective,” says Emond. “It’s not just loans, it’s different types of resources that are appropriate in different circumstances and really planning for it.”