Paying for College, look at the financial aid offer letter

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ROANOKE (CONSUMER REPORTS) - By May first, many high school seniors will have to plunk down a deposit on the college of their choice. As they make their decisions, an important factor is the school's financial aid offer. Consumer Reports has advice on how to understand your student's financial aid package and avoid excessive debt.

High school senior Fiona Quinn is fortunate to have several college acceptances from both public and private schools. After comparing their financial aid packages, she picked a state school.

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"The tuition was a huge factor in my decision," said Fiona.

"We knew that Fiona would come out with less debt, and so would we," said her mother, Debbie Quinn.

The financial aid offer letter is key to making the college decision. First check what's being offered in grants and scholarships, which don't need to be paid back. A caution - the letter often only covers the first year.

"Contact the financial aid office and ask questions like, is a grant renewable? Does a scholarship require a certain GPA for it to continue into another year?" said Donna Rosato, Money Editor for Consumer Reports.

The letter also details how much money you can get in federal loans. For the rest, you may have to look to private loans, which you borrow from a traditional lender.

"You want to make sure you start with federal loans. They have a lot of advantages over private loans. They have fixed interest rates, also more flexible repayment options," said Rosato.

Also check whether the federal loans are subsidized. Those are preferable because you're not responsible for any interest that accrues until you leave school.

Like many students, Fiona found figuring out how to pay for college has been an eye-opener.

Occasionally, it can be worth negotiating with a school for a better financial aid package, especially if your family's circumstances have changed because of events like a job loss or a divorce. There's a helpful tool where you can compare costs and financial aid at each of the schools you're considering, at www.consumerfinance.gov/paying-for-college.