07/07/2014 02:58 pm ET Updated Sep 05, 2014

Student Loans: Size Matters, Right?

Maybe, but then again, maybe not. You see, we just so happen to live in a culture where bigger is perceived as better. But that not always be the truth, especially when you are considering taking on thousands of dollars in debt.

Are You Sure You Want to SuperSize your Student Loan?
Yes, it is tempting to simply look at the various college aid offers and just go for the largest one. Really, doesn't $30,000 in aid look better than $17,980? On the surface, sure, but dig a little deeper, do just a little bit of homework for yours or your student's situation and you may, in fact, decide to make a different choice.

Here's Why
The number you are looking at does not tell you the whole story. Consider that number to simply be a piece of the puzzle. Your job is to find all the pieces of the puzzle and put them together in a way that makes cents (pun put there on purpose).

What Really Matters?
In a nutshell, from a purely cost perspective, the only thing that really matters is the Total Cost of Attending. Depending on the school you are considering, this total cost may or may not be broken down clearly for you. Unfortunately, as of this time, there is no Federal Labeling Law for college attendance. It would be nice if there was a labeling law so you could just read the label the way you do in the grocery store when you're shopping. Anyway, the point is to really compare you need to figure out the total cost.

What is Total Cost of Attending?
You start with what the accounting folks call direct costs. These are bills charged directly by the school for things such as tuition or books, that sort of thing. So figure out the direct costs and total them up. Now move on to what is referred to as indirect costs. Indirect costs include things such as materials, living expenses and the like. Now total up the expected indirect costs. Finally, add the direct costs to the indirect costs, and you have the total cost of attending.

Apples to Apples
No, not that silly game that was popular a while back. No, apples to apples means you figure out the total cost of attending for each and every college you are actually interested in attending. Next, you lay out the total costs for each school side by side. Obviously, you can see which school will cost more.

But Hold On
There's a bit more homework involved. Now, go back to the aid offers from the various schools. Subtract these offers from the total cost of attending. That difference is the number that has to be made up somehow, whether with private loans, plus loans or other options.

It Doesn't Stop There
Now you have covered the financial analysis of the offers. At this point you want to do a reality check. Does it in fact make sense to borrow money for the school and program you are looking at? Consider, would taking on $32,875 in student loan debt for a degree in underwater basket weaving be worthwhile? Might there be a better choice? You get the point. But let's go ahead and state it just in case. Make sure your school choice and loan or aid package makes sense for you.

That being said, taking on student loan debt can in fact be the best and smartest investment you ever make. Remember, for the price of a few years of study and few more years of student loan payments, you can come out much, much further ahead than you would otherwise.

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