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LINDA WERTHEIMER, HOST:

High school seniors have been applying to college and wondering if they'll get in. By now, most know if they were accepted so they can wonder, instead, how they'll pay for it.

STEVE INSKEEP, HOST:

Today, we look at the next letter those students will get - the one laying out their financial-aid packages. Many colleges' financial aid offers are confusing, and some are downright deceptive.

WERTHEIMER: Our colleague David Greene spoke to two experts on what students and families should know as they read those letters. It's part of NPR's examination of how Americans are paying for college. Mark Kantrowitz founded the financial aid website FinAid. Chris Reeves is a guidance counselor at Beechwood High School in Fort Mitchell, Ky.

DAVID GREENE, BYLINE: Chris, what are some of the questions that students are coming into your office asking?

CHRIS REEVES: Oh my gosh. How much time do we have?

GREENE: Give me just a few.

REEVES: Well, bringing in those financial-aid letters is probably the most common. I get questions about, what does this mean? And I've got to explain, look, this says this is part of your financial-aid award, but this part's a loan. And it's really tough because you can get a scholarship of 13-, $14,000 per year; that seems amazing. And then a family, you know, they don't always understand that part of the financial-aid package includes loans. What happens - when they see the unmet need, that bottom line of what you still owe, it can come as a shock to them, definitely.

GREENE: Well, Mark, what do you think the few key ways are that financial-aid letters can be more transparent?

MARK KANTROWITZ: I've seen award letters where they might have acronyms: FED, STAFF, maybe the letter L or LN - but, I mean...

GREENE: I'm already confused. I can't imagine what parents and families are going through.

KANTROWITZ: Yeah. And it's a reference to the Federal Stafford Loan. And the only thing they have is the name - that's often cryptic - and a dollar amount. There's no interest rate listed, there's no monthly payments listed. The first thing is to label them. A loan is a loan, a grant is a grant. Then start with the cost of attendance, then the grants. You subtract the grants from the cost of attendance, to how the line - with the net price, and then you can list the loans as ways of financing the net price. So you need to make sure that you've got not just the tuition fees but if it's a residential college, the room and board, textbooks, supplies, computer, transportation to and from school. It's the total college cost. and then subtract the grants.

GREENE: It basically takes loans and everything that you're going to have to pay at some point, and it sort of makes a bigger number so you get a more realistic picture.

KANTROWITZ: It's a more realistic picture, but it's a one-year figure. About half of all colleges practice what's called frontloading of grants, where you get a better mix of grants your freshman year than as an upperclassman. That means your net price as a sophomore, junior and senior will be sometimes thousands of dollars higher than your net price as a college freshman.

GREENE: Frontloading seems like it's schools doing something very unfair - giving the best picture at the beginning, but by the time you get to your junior or senior year, a lot more of the aid you're getting is in the form of loans. How do colleges explain doing that?

KANTROWITZ: Well, let's call it what it is. It's bait and switch. The colleges try to justify it by saying that students who are going to drop out are most likely to drop out as college freshmen, and they want to leave that student with as little loans as possible. They could just as easily have that policy built into their refund policy. Part of the problem is, the industry has gotten so used to do these kinds of things that they don't even seen that it's misleading the families.

GREENE: Chris Reeves, I think I already know the answer to this question, but how often do you get students and parents coming in and just sort of putting this financial aid letter on your desk and saying, "help me"?

REEVES: That's what's happening right now. I'm in a school right now with a lot of good resource. But schools where you've got counselor-to-student ratios of 1,000 students to one counselor, that sort of thing...

GREENE: Wow, some schools have that? That's kind of astounding.

REEVES: California's average is over a thousand.

GREENE: For each counselor?

REEVES: Yes. So, who's going to explain it to them?

GREENE: Well, Chris, you're in the trenches working with students all the time and Mark, you're looking at sort of the broad picture here and the policies. I just wonder, Chris, do you have any questions for Mark?

REEVES: Maybe. I feel like I'm a little more optimistic. Like, bait-and-switch caught me by surprise a little bit. I work with a lot of college professionals. I feel like they've been pretty forthright. And maybe I've - not being in the national scale and just being in my old little town of Fort Mitchell, Ky., I haven't seen that.

KANTROWITZ: Well, and I've seen a lot of opposition to standardizing the financial-aid award letter. I mean, you have award letters that say you can further reduce your college costs with the federal Parent PLUS loan. A loan is a loan. It has to be repaid - usually with interest, which increases your costs.

GREENE: I mean, how big are these loans getting? How much of a burden are loans becoming for families?

KANTROWITZ: Well, the average debt at graduation for a bachelor's degree last year was about $30,000. And so long as your total debt at graduation is less than your annual starting salary, you'll be able to pay back those student loans in 10 years or less. If you're going into a very lucrative field, like nursing or petroleum engineering, you can afford to take on more debt. The time to minimize that debt is before you incur it, not afterwards.

GREENE: Once a student is accepted, colleges want them to come. I mean, at that moment, do students and families get some sort of leverage that they can use - could say "hey, if you give me a little more aid instead of loans, I might come"?

KANTROWITZ: Well, if there's any unusual family financial circumstance, anything that changed from last year to this year, these schools can make adjustments to the financial-aid application forms, and use that to generate a new financial-aid package. An example of a special circumstance is job loss.

GREENE: Chris Reeves, does that give you a chance to work with them, to let the colleges know that there are different circumstances that might mean a student needs more aid?

REEVES: Absolutely. I had a situation just last year where we sat and did the math, and he was close to being able to afford it. So I just said, I think with a little bit more, he can make it. And they came up with a thousand more dollars, and the student is attending and he's happy - living at home, so he didn't have the money to live in the dorm, even though that would have been a great experience. I'm a fan of the negotiating terms of being truthful and just showing the reality, and not "let's see how we can play these schools and get in a bidding war of some kind."

GREENE: Chris Reeves, Mark Kantrowitz, I've learned a lot. I hope our listeners have as well. We really appreciate the time. Thank you.

KANTROWITZ: Thank you for having us.

REEVES: Thank you for having us.

WERTHEIMER: Our colleague David Greene. He spoke to guidance counselor Chris Reeves of Beechwood High School in Fort Mitchell, Ky., and Mark Kantrowitz, publisher of the website Edvisors. Need help decoding your financial-aid letter? You can see a sample letter translated into plain English, at NPR.org.

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