The five biggest myths on financing college

John Wasik is on a mission. The Chicago-based financial blogger had been researching abuses in the student loan industry a year ago at the same time he and his wife were looking at colleges for their oldest daughter. Wasik views the $1.3 trillion in college debt owed by 40 million Americans as "nothing less than mass, multigenerational financial abuse" and sees college debt as "the enemy." He was determined to provide his oldest daughter with as debt-free a college degree as possible.

As he tracked his family's search for options, he wrote an e-book, "The Debt-Free Degree," recently released by Forbes Media, where he offers tips on how students can "earn a debt-free degree and live a more prosperous life." I caught up with Wasik at a recent business writers' conference where he laid out the five biggest myths on college financing that he believes can trap families into piles of unnecessary and expensive student debt.

Myth #1: Aim for the most elite, highest-ranked name-brand college you can get in to and worry about finances later.

"You have to chuck conventional thinking out the door when considering colleges," Wasik asserted, advising college-bound students and their parents to ignore the popular annual rankings on top schools. "The mission is to find the best fit, but it has to be the best fit for the family." A college choice that leaves parents and students with mounds of unmanageable debt is not a good fit. Don't overlook "great second-tier schools," many have large endowments that can offer significant financial incentives for qualified students.

Aspiring students should also look at statistics such as four-year graduation rates, the percentage of students receiving financial aid and potential earnings for programs a student is interested in. This information is usually not revealed either in magazine articles or on college tours, Wasik said. A good place to start is the U.S. Department of Education website, College Navigator.

To thoroughly explore options the school search ideally should start in the sophomore year, he advised, with the primary responsibility falling on students and their families. Even the most well-informed and well intentioned high school guidance counselors are often overstretched and cannot give the same attention to every individual student's college search, he cautioned.

Myth #2: The total financial aid offers is what matters, not how you get there.

If loans are necessary, Wasik advised opting for government loans and avoiding private lenders, borrowing the minimum necessary and making sure you understand total cost, repayment options and penalties.

Myth #3: State schools offer the most economical college choice.

Wasik is not opposed to public universities and even suggests that for some; spending the first two years at a community college can be a smart move to lower total costs. But he pointed out that state schools can be more expensive than private schools. While the sticker price at state universities is lower than at private schools, state governments have cut higher education funding for years, resulting in rising tuitions and shrinking financial aid. Grants and scholarships can be more readily available at a well-endowed private school than from a public university, potentially lowering the actual cost below that of a state school.

Myth #4: The financial aid number a school offers is final.

Never pay retail when it comes to college. If you don't like what a school is offering your qualified student, you should push back, Wasik advised. A combination of grants, tuition discounts, special scholarships and work-study can lower the "net cost of tuition," but you have to ask, as most schools do not volunteer this information unprompted. Be open with details that bear on your family's financial situation and ability to fund college. If you have more than one student approaching college age, your employer has been downsizing or your family has unusual medical expenses, reflect that in your financial aid documentation.

While private lenders can be difficult in negotiating a repayment plan, persistence can pay off. And under special circumstances and a high hurdle of proving total disability, it is possible for student loans to be discharged.