How to increase your student's financial aid

As your child labors over college submissions forms, you might be wondering how you'll be paying for all those years of schooling. “Today” financial editor Jean Chatzky shares some tips on applying for financial aid, including negotiating with the colleges.

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Unless your child has applied early decision, you're probably still sweating through the college application process. And yet, though you can't even submit the FAFSA (that would be the Free Application for Financial Student Aid) until the beginning of next year, you'd be smart to start thinking about financial aid as well. Why? Because experts say there are things you can do now — including selecting particular schools to apply to — that can help not only maximize the amount of aid your child is offered, but increase the amount that comes in grants (which don't have to be paid back) versus loans (which do). Here's the lowdown:

Don't delay. Jan. 1 is the first date you can submit your FAFSA and, says Ben Kaplan, publisher of ScholarshipCoach.com, you want to do so as close as possible to that date because “a lot of aid is given on a first-come, first-served basis.”

That's not necessarily easy because the forms ask for tax information many people don't have until they get closer to April 15. If you're one of them, it's OK to estimate your income as long as you can come fairly close. Running your projected end-of-year numbers through a program like Turbo Tax can help.

Target schools by situation. The FAFSA form is the building block for all financial aid. Some schools — mostly big, public universities — use it exclusively. But others — mostly private colleges — have other formulas they layer on top. For example, if your parents are divorced, you want to know how each school treats the income of the non-custodial parent.

The FAFSA doesn't count it, which means schools that use it exclusively aren't relying on that parent to help pay. But some private schools will factor it in; that's something you need to know, particularly if your non-custodial parent isn't planning on helping.

Likewise, home equity is a hot spot. The FAFSA doesn't count it. Many private schools add it back — but some cap the amount they count. If you're from a family without a high income but one which has a lot of home equity, that's key. “I tell the students I coach to never rule out a school solely because of the sticker price,” says Kaplan, also the author of “How to Go to College for Almost Free: 10 Days to Scholarship Success.”

But having this information going in can help. You can typically find it on the financial aid page of a school's Web site. The other important numbers to know about a school: What percentage of their aid comes in the form of grants and what percentage comes in the form of loans. Clearly, the higher the former, the better off you're likely to be.

Pick schools that really want you (and don't want others on your list to have you). These days, it's not uncommon for seniors to apply to half a dozen to a dozen different colleges. Make sure at least some on your list are those that will want you so much they'll likely give you more aid. Look for those with a high admission rate, but low acceptance rate (these are the sorts of figures published in college guides), says Brian Greenberg, CPA, a certified college planning specialist from Marlton, N.J. That indicates a school that's having trouble attracting the people they've accepted. They're more likely to want you. Likewise, the further away from home you're willing to go, the more likely a school is to want you in the name of geographic diversity. (I know about this firsthand, having played the West Virginia card.)

Keep a future “negotiation” in mind. Once you receive your aid offers, the process is not over. It's fine to go back to the schools you're most interested in attending to see if you can boost your aid package a bit. This is not a negotiation, exactly — I put that word in quotes above because financial aid officers recoil at the sight of it. It's more of a plea for a revision.

You can ask for more aid if your family's financial circumstances have chanced — if there's been a divorce, unemployment or a serious illness. But you can also, very politely, ask for more if other schools have made it easier — in financial terms — for your child to attend by offering more aid from the start.

Interestingly, both Kaplan and Greenberg note that schools tend to have a competitive set, a group of schools with whom they're willing to parry to grab a particular kid. For that reason, simply to enable you to have this sort of conversation, you may want to apply to a second school in the same conference — for example, Clemson if you're applying to North Carolina, Villanova if you're applying to Syracuse.

Where the Ivies are concerned, notes Kaplan, with the exception of Harvard, they'll generally match each other's offers. But again, don't go in haggling like you're buying a car. The softer sell is much more successful in this case. Even better: Have your children make the pitch themselves.

Jean Chatzky is an editor-at-large at Money magazine and serves as AOL's official Money Coach. She is the personal finance editor for NBC's "Today" show and is also a columnist for Life magazine. She is the author of four books, including 2004's "Pay it Down! From Debt to Wealth on $10 a Day" (Portfolio). To find out more, visit her Web site, www.jeanchatzky.com.