A little while back, we asked Consumerist readers to send in their student loan-related questions to Rohit Chopra, the Consumer Financial Protection Bureau’s Student Loan Ombudsman. Today, we’re bringing you his answers in three parts, each dealing with a different aspect of the topic. Since it’s about time for next year’s freshman class to decide on schools and financial aid packages, we’re starting with answers for prospective students.

NOTE: A number of the questions in this series are composites of the many, many queries sent in by Consumerist readers. If you feel like there are still unanswered questions, shoot us an e-mail at tips@consumerist.com with “Dear Rohit” in the subject line and we’ll see if we can get clarification.

What is the best way to compare financial aid packages at different schools? What are key factors I should look out for?

Rohit: Hopefully your school will be sending you the Dept. of Education’s “Know Before You Owe” financial aid shopping sheet [see example PDF here]. This will help you make apples-to-apples comparisons. If your school isn’t using it, you’ll want to look closely to make sure there isn’t anything hidden that will surprise you later.

The most critical factor is the cost of attendance after grants and scholarships are factored in. This is the real price that you’re paying. Be sure to look at the school’s default rate. This tells you whether students who borrowed defaulted on their loans.

Until all schools begin using the Dept. of Ed’s simplified financial aid offer letter, are there any tools that will allow prospective students to make apples-to-apples comparisons?

Rohit: Yes! Be sure to try out our Paying for College tool. You can enter in your financial aid information and the tool will calculate how much you will owe each month in student loans after you graduate. The tool also gives you a sense of your overall debt burden compared to the average starting salary.

Are there any red flags or specific, possibly misleading, language I should look out for when comparing packages?

Rohit: Take a close look at the terms of any scholarships you’re getting. Are they renewable or will they disappear after the first year?

Make sure you understand what’s a grant and what’s a loan. If non-federal loans are in the package, investigate whether you need to separately apply and if the rate is competitive.

For parents considering co-signing a child’s private student loan, is there any way that the co-signer can be removed from the loan when the child reaches a point in her life when she’s financially self-sufficient? Or is the co-signer forever tied to the loan?

Rohit: It depends. Some private loans have an option to release the co-signer under certain conditions written into the original loan terms, which is generally that on-time payments are made for a couple years. This is not a certainty though, since many lenders who include this option require you to “apply” for the release, which may involve some paperwork and even a credit check.

For borrowers with private student loans who are currently in repayment, look into this option. I hate to say this, but if you unexpectedly face a serious illness or death, your co-signer will generally be asked to pay up, so you’ll want to think about how to protect them.

This is the first of three posts in which Chopra answers questions from Consumerist readers. In Part 2, Rohit answers questions about repaying, consolidating, and refinancing your student loans. Part 3 looks at loan forgiveness and default.

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