How To Evaluate Your Financial Aid Award Letter For The Best Choice

College financial aid award letters are rolling in, and along with it, the confusion of helping students decide what to do next. Financial aid packages can be tricky to decipher. There is no standard for the financial aid award letters and the terminology can be confusing.

There are award letter comparison tools like this one from Finaid.org as well as sample financial aid award letters that can help, but here’s what you want to pay attention to as you compare and ultimately decide which to accept:

Calculate your own total college costs

Your letter will list the total costs of college, but you will need to put on your detective hat to find out the true cost. Going with the costs listed on the award letter could lead to under or over-borrowing.

Verify the cost of tuition, books, fees (enrollment, lab fees, etc) and room and board (including the different meal plans) through each school’s website that you’re considering. Don’t forget the fact that the student may need money for personal care, fraternities/sororities, sports teams, etc. Finally, to get the full cost, contact the department the student’s major to learn any additional costs for things like specialized computer software they’ll have to purchase, graphic calculators, etc.

Don’t forget transportation

Factor in transportation since this can add up to thousands of dollars a year depending on the distance between school and your home as well as the method of transportation. These are all things to consider as the true cost of college, and knowing them ahead of time will not only help you evaluate the true value of the award package, but it can help you anticipate unplanned costs like a lot of airplane rides for a homesick child or an empty nester parent.

Know the difference between net price and net costs

While award letters focus on the net costs, you’ll want to focus on the net price in making the decision. The net price is the difference between the total college costs and the total non-loan aid (scholarships and grants). In other words, it is the amount that your family is on the hook to pay either through savings or loans. The net cost is the difference between the total college costs and the entire financial aid package (including loans and work study).

The net costs are typically closer to the expected family contribution (EFC). Sometimes you may see a net cost of $0. This does not mean the cost of college is free, it just means that you may not need to dig into savings to pay tuition – but you will probably have to borrow.

Some award letters will throw in a ton of loans, including a PLUS loan, to get the net cost to zero. A financial aid award package with a $6,000 net price may be a better deal than a package with a $0 net cost if most of that $0 net cost package is made up of student loans vs. grants.

Learn how to evaluate the actual award

Compare how much free money each college is actually offering. As you read the award, carefully track the offers of free money, free money with strings attached, forgivable loans disguised as free money (grants) and actual loans. Some colleges will front-load grants and scholarships in the freshman year to entice enrollment, but then those go away, meaning you may not get as much aid in future years.

Are awards renewable? Find out if the awards are renewable each year until graduation (or at least for 4 years) and what strings are attached, if any. Some of the strings may be maintaining a certain GPA or a certain course load.

Work study considerations: If the plan includes work study, ask if the programs have a post-graduation employment requirement. Not fulfilling the employment requirement can turn your free grant into a loan.

Basically, you don’t want a bait and switch financial aid award package that sounds great enough to get you hooked into accepting the college until you read the fine print and find out you may not be able to afford the second year.

Get ready to negotiate

Many people are surprised to learn that a financial aid award package is not written in stone. If your desired school offers an anemic financial aid awards package, consider appealing the award – competition is fierce for students, especially at smaller schools, who would rather have enrollment numbers than tuition.

Tips for appealing your financial aid

Put it in writing. If you are appealing based on need, contact the financial aid office to understand the appeals process, get the correct points of contact for an appeal and state your case in writing. Be specific and state if you had a drop in income, a medical crisis, more than one child attending college, or are suddenly single.

Get creative. You might ask for an unsubsidized loan to be upgraded to a subsidized loan or even for a clothing allowance for kids moving to very different climates (think LA to Boston).

Followup with an appointment. Give it a week and then call your point of contact or make an appointment. If your making a case based on merit, consider directing your letter to the enrollment or admissions office and start bragging.

Create competition. Use the better award letters to ask for more money and show off your child’s stellar academic record, especially if their grades or aptitude test scores improved since their college application was submitted.

The choice of college is an important one, particularly when financial aid needs vary widely between choices. Don’t make a hasty choice that you may later regret. Even in the 11th hour, these steps can help you evaluate your financial aid award packages to help you make the most informed decision for your family.

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