So, you’ve gotten into college (congrats!), filled out your
FAFSA (great!) and are now staring at a financial-aid award
letter, wondering what to do next (uh-oh). As the May 1 deadline
to accept financial-aid offers approaches, TIME Moneyland spoke
to Mark Kantrowitz, publisher of FinAid.org and Fastweb.com, to
thwart many of the common misconceptions families have when it
comes to financing a college education. 1. Loans reduce the cost
of college Student loans help families manage their cash flow by
spreading out the cost of college over many years, but they do
not lower the expense. “A loan is a loan is a loan,” says
Kantrowitz. “But a lot of financial-aid award letters treat
loans as if they reduce the cost.” They don’t. Instead, loans
simply reduce the amount of money families have to write a check
for up front. Additionally, because of interest, they actually
increase the final cost. 2. Net price is the same as net cost
Many financial-aid award letters confuse students and parents by
listing both the “ne