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Don't say 'yes' to that college before you check the financial aid offer

High school seniors may already have their college acceptance letters and financial aid offers in hand, but there's no reason to rush on making an enrollment decision.

Take time to assess those aid packages carefully.

Six in 10 colleges sent financial aid offers to students before the winter holidays, according to a new analysis of 145 colleges from Royall & Company. (Last year it took until early March to hit that benchmark.) More students have already decided which college they'll attend, too, with admissions up 5 percent compared to last year.

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"Those students who were accepted and got a reasonable need-based award from an institution were content with that," said Pamela Kiecker Royall, head of research at Royall & Company.

The surge in early-bird offers are largely due to a recent change in the start date for filing the Free Application for Federal Student Aid (aka the FAFSA), a form that determines eligibility for financial aid.

"You may think you have a free ride from this college, when in reality you have a ridiculous amount of loans." -Mark Kantrowitz, vice president of strategy for Cappex.com

Families are now able to file as early as October for the upcoming academic year, using income data from an earlier tax return. Under the old system, families had to wait until Jan. 1 — three months later — and use data from the just-concluded tax year.

Many families took advantage of the new start date to apply for financial aid early, giving them more time to assess the affordability, said Mark Kantrowitz, vice president of strategy for college and scholarship search site Cappex.com. Many colleges set their enrollment deadline as May 1, which has come to be known as National College Decision Day.

"I would encourage families to use the luxury of the extra time," he said. "You have the time to make a more informed decision."

Deciphering college aid letters

Due diligence ahead of "decision day" might include practical measures, like making another visit to campus. It should also include a thorough assessment of the aid offer, said Kevin Fudge, director of consumer advocacy for American Student Assistance, a nonprofit focused on higher education financing.

"It can be overwhelming and daunting to look at that letter," he said.

1) Analyze the components.
Terms aren't always clear, so start your review by going through the offer line-by-line to determine what's what. Separate out scholarships and grants, which don't have to be repaid, from loans that do, Kantrowitz said. That gives you a truer picture of your out-of-pocket costs.

"You may think you have a free ride from this college, when in reality you have a ridiculous amount of loans," he said.

If you expect your student will receive outside scholarships, ask about the displacement policy, he said. Some colleges use those to offset loans, while others will first use them to offset grant aid from the college. That calculation could make a big difference in comparing offers.

Echo | Getty Images

2) Crunch costs.
Check what's included in the college's cost estimate, said Kantrowitz. It should include indirect expenses like travel to and from campus and textbooks, as well as tuition, room and board. Fill in the blanks for any missing expenses so you can better compare different colleges' offers.

Look to see if the college estimates are reasonable, too, based on personal details like your student's major.

"A single physics or calculus textbook can cost you as much as $250," he said.

3) Think long term.
"Look at [college cost] from a four-year perspective rather than a one-year perspective," Fudge said.

The aid package's addendum typically contains details like whether a scholarship can be renewed in future years, and under what circumstances, he said. That's also where you'll find any conditions your student has to meet to keep the aid, like meeting a minimum GPA.

A generous aid package as a freshman doesn't mean your student will be awarded the same deal as an upperclassman. Depending on the terms, a college offering a smaller amount of annual aid, but as a four-year award, might be the more valuable offer, he said. (CollegeNavigator.gov offers breakdowns of average aid for freshmen and for all undergraduate students.)

That multiyear assessment is a better gauge of affordability, Fudge said, and can help you figure out the best plan to pay for college.

4) Ask for more help
If your financial situation has changed since filing for financial aid, consider preparing an appeal to the college. They may be willing to adjust your aid package, Kantrowitz said, although that may simply mean more loans, rather than additional grants.

You might also reach out for a reassessment if one college offers more aid than another. But any bump up in aid resulting from that tactic is typically because the reviewing college realizes it was missing a piece of information about your finances that other colleges had, he said.

"It's not because of your strong negotiating skills," Kantrowitz said. "Colleges really aren't car dealerships, where bluff and bluster can get you a better deal."

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