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Unwrapping the Package

Reading your financial aid student award letter can sometimes seem like decoding ancient Egyptian hieroglyphics. To you, "aggregated amount for FFELP" might as well read "lyhbdsrhpo asgyub HHQLX." That's why CB Teen sought the help of Michael O'Brien, CEO and co-founder of FinancialAid.com.

First, another acronym, courtesy of O'Brien - FFLEM (yes, like phlegm). Free money (as in scholarships), Family money, Loan money, Earned money, and My money - all things to consider when paying for college. And, there's a reason "free money" is listed first. "There's no sense in not using something that's available to you," O'Brien says. "If you have a chance, apply [for a scholarship]. Apply for everything - it'll be rewarding."

Even if you do apply for scholarships, they most likely won't cover your entire tuition bill. Here comes the hard part - supplementing your EFC (Expected Family Contribution) with loans. But how do you know what you'll qualify for? O'Brien breaks it down:

Stafford Loan: There are two types of Stafford loans - subsidized and unsubsidized. Both require at least part-time college enrollment. For a subsidized loan, you must demonstrate financial need, and the government will foot the interest bill until you leave school. For unsubsidized loans (not need-based), you'll be responsible for the interest that accrues from the loan's start date.

Perkins Loan: This is a campus-based loan for those who demonstrate significant financial aid need. It is funded by both the school and the government.

PLUS Loan: This loan allows parents to borrow up to 100 percent of the cost of college. To qualify, they must meet some basic requirements (like being a U.S. citizen or permanent resident), and pass a credit check. Your 'rents can also apply for a PLUS loan retroactively to pay for prior college costs.

O'Brien believes a PLUS loan is the best bet. "Parents can borrow, and the student can take over the payment," he says. And while the cost of tuition can be staggering, don't worry so much about finding a good deal. "People look at college like a business decision," O'Brien says. "They want to go to a college that gives them the best deal - but that's a mistake, because you want to go to the college at which you'll be most successful."


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