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Financial Aid can have a paralyzing effect on parents. Many people wrongly discount themselves from schools well within their reach because of what they do not know about financial aid. Demystify financial aid a read the common myths below.

They can’t if they don’t apply, that’s for sure. Parents sometimes fail to even consider selective private colleges because they think they won’t qualify for aid. Families with income between about $40,000 and $90,000 are considered middle class in the U.S. Even at the high end, most can qualify for aid the expensive private colleges.

There’s no one right answer. Several different solutions can work out very well, given the student and the particular circumstances. That’s the beauty of financial aid. It can create options. If you are interested in, for example, colleges in Massachusetts offering Criminal Justice, consider private colleges such as Stonehill College and Northeastern University as well as Westfield State. Compare the aid awards, and then make the decision as a family. It’s better to explore all options than to regret what might have been. Spending an extra $50 on an application will really be worth it in the spring if that school gives you $2,000 more aid.

It is true that financial aid from the federal government is largely limited to loans and a job on campus for most middle-class students who qualify. It’s also true that public universities give primarily federal aid, unless your student has a 90-mph fast ball, a 125 MPH serve or some other unique and amazing talent!

At private colleges, though, federal aid is typically only a small part of total aid available. Private colleges use money from their endowment to fund grants. Grants are outright gifts of money, based on your financial need.

Since grants are based on need, many students are eligible to varying extents. The more a school wants a student, all other things being equal, the more generous the aid package will be. Target a place where you’ll be in the top 25 percent of entering freshman academically. Money will likely follow. Keep in mind that every student can be exceptional at the right school. The more a school wants your son, the greater the chance that the aid package will contain grants vs. loans or work-study.

There’s an unwritten assumption, particularly in the suburban Northeast, that every student in the top two or three places in the class will be best served by a Harvard education Although you’re the one responsible for parenting, which includes paying for college, you’ll get pressure from unexpected sources. People will pressure your student to attend his reach school, if he’s accepted. Sources of pressure might include the high school, his friends and their parents, and your parents (the student’s grandparents).

As the parent, your role is to help with the selection of an affordable college that will challenge and nurture your student, helping the student realize his/her potential. Not only do you need to pay for college, but also for retirement, which is looming. For example, your student might get a lot more money at Drake University than at Middlebury College. Your student might also get better grades for graduate school in the bargain. Use your wisdom to help the decision.

Wrong! Aid packages vary considerably, with the biggest difference showing up in the distribution of institutional grants in private colleges.

Federal financial aid is awarded on more or less the same basis for school to school because the awards result from the Federal Methodology calculation, which Congress developed. Congress makes substantive changes to the formula every five years and cost-of-living adjustments annually. All colleges use the Federal Methodology in calculating a student’s Stafford Loan eligibility, for example. Federal aid is very similar from school to school.

Aid packages at private colleges vary because the Federal Methodology does not restrict how they dispense their own money. Even though institutional methodologies do vary from college to college, all schools tract Federal Methodology closely. However, two exceptions apply almost universally:

#1- in making decisions about disbursing their own money, most private colleges do count home equity.

#2- In addition, most private colleges expect students to contribute about $1500 from their summer earnings.

See Myth 5. I’m mentioning this twice, because it confuses almost all parents. Most private colleges do count the house before they’ll give out their own money. (They’re much more generous with federal money, it’s true, and don’t count the house in that calculation.) Typically, colleges look at the equity parents have built up, add it to their other assets, subtract an asset protection allowance of about $40,000 from the total (the figure is based on the age of the older parent), and multiply the remainder by 5.64 percent. That’s how they count the house.

Busy parents sometimes operate as if they believe their student will learn how the Alice-in-Wonderland work of financial aid works-perhaps in the high school guidance office-and all will be well. This is the same student who’s busy getting good grades, enhancing his student ‘resume’ with extra-curricular activities, practicing a sport after school every day, taking occasional time out for social interactions, keeping his room clean (sort of), and working and saving money for college. Not to mention studying for SATs, opening voluminous mail from colleges, and trying to figure out what to do with his life.

Who’s going to be signing the checks? Enough said. Even if your student is destined for a doctorate in accountancy, do it yourself. You know the intricacies of family finances, and you know your hopes and dreams for retirement. With the annual cost of selective private colleges at $31,500 this year, preparing pays. The difference between taking action early in your student’s high school years and waiting till after college acceptances have been received may be tens of thousands of dollars.

Start by finding out what you need to do to lower your cost of college. Some of these steps will be financial, others will involve wise college selection.

E-mail Bonnie Hepburn, CFP