Financial aid tips: Sticker price still does matter

It's that time of year again, if you have kids in college or getting ready for college: It's time to fill out the FAFSA (Free Application for Federal Student Aid) form, the tedious, repetitive, boring and mildly intrusive paperwork required to qualify for financial aid.

Everyone should fill out the FAFSA form: It's free, and you have nothing to lose and tons to gain by filling it out and turning it in. But The Los Angeles Times reports that "students often limit their college search to institutions that they think they can afford -- typically junior colleges and state colleges and universities, rather than high-priced private schools. The folly is that high-priced private schools often provide so much aid that they become more affordable than less prestigious colleges. . ."

That's true for a very small number of schools: If your student is smart enough to get into Harvard, Yale, Princeton, etc., and you have a low expected family contribution, you will, in all probability, get something close to a free ride.

But after that, there's a steep, steep drop-off. New York University graduates, for instance, leave college with an average debt load of $34,850, compared with just $14,541 for SUNY Binghamton grads.

What's worse, over-reliance on financial aid can make students vulnerable to cuts, and, because of the complex way financial eligibility is calculated, options like working part-time or selling stock that has appreciated are often not practical because they decrease financial aid eligibility. In addition, earning third-party scholarships will not help pay for college if your child is reliant on financial aid, because these scholarships are counted against financial aid eligibility. If you pick a school with a low sticker price, your options for covering the cost are much less restricted.

Financial aid is a fantastic resource, but for the best deal on college, ignoring sticker price and putting all your eggs in the financial aid basket isn't the solution, as appealing as it sounds. A better idea? Apply to a few private colleges if that's your dream, but be sure to also include in-state colleges and universities, which will likely be a better bargain for families hoping to avoid looting their savings or saddling their kids with massive student loans.