For the last decade, the average tuition and fees at public and private universities ballooned by 38 percent. In comparison, the median family income increased by only 8 percent according to College Board, a not-for-profit association that connects students to college success and opportunity. This can be frightening news for parents and students who are receiving financial aid award letters in the mail.

Public colleges and universities have historically been considered affordable alternatives to the pricey private institutions. With strict budget cuts for state-funded public institutions, the cost of attending these affordable alternatives is also on the rise. Even 2-year community colleges have reported tuition increases for the last few years.

Once parents and students get over the initial sticker shock, they need the skills to properly decipher what the award letter really means to their bottom line. This is where high school counselors can play a big role.

Helping parents navigate through the financial aid process can take a lot of the stress off both parents and students. And it gives them the information they really need as they evaluate admissions offers and payment options.

For starters, parents and students should know that the actual price tag of a four-year education is not the actual amount you are responsible for paying. Tuition discounting is common at both public and private schools. More than half of all college students, both public and private, receive some form of financial aid.

“Compare the bottom line, not the sticker price,” says financial-aid expert Mark Kantrowitz, creator of finaid.org web site. Once parents have determined their expected family contribution, they can begin to explore the many ways to pay for their child’s education.

As they compare financial aid awards between schools, parents and students should do a little negotiating. If the student prefers one school over another, but the preferred school awarded less aid, it is acceptable to pit one school against the other to negotiate a better financial aid package from the preferred school. This is particularly effect with students with strong credentials and accomplishments.

Parents and students should also look at their financial aid options. The most common forms of financial aid are scholarships, grants, loans and personal savings. To take advantage of any of these options, parents and students must start planning early.

Scholarships are the best form of financial aid. Students can hunt for scholarships on their own and can begin applying for them long before senior year. There are thousands of private and civic organizations that sponsor scholarship funds. Students and parents can conduct scholarship searches on the Internet, at the library and even in the high school counselor’s office.
Most schools award grants without students completing special applications for them. In addition to school grant programs, each state has a grant program for students with demonstrated financial need. It is possible for students to receive up to 30 percent of their financial aid package in grants.

Student loans are the most known financial aid option. Because the amount of grant money has continually decreased, students tend to rely more heavily on loans. This has led to an average of $18,900 in student loans for undergraduate students. While there is nothing wrong with using student loans to pay for college, it is best to use them as a last option as they must be repaid soon after graduation.

The best way to dodge big college debts is to start saving early. Many people don’t consider saving for college until it is too late for the savings to make a significant difference. But with careful planning and research, parents can take advantage of various tax-free savings plans. Two such programs are 529 plans which allow parents to save as much as $305,000 per child and IRA-like Coverdell accounts offered by banks, brokers and mutual-fund companies that allow an investment of $2,000 a year per child.

Armed with the truth about the cost of a college education and a savings plan started early, parents and students should be able to say good-bye financial aid sticker shock.