03 Jan How to Carefully Compare Financial Aid Offers
The big reason so many students and parents rush to file the FAFSA each year is that they hope to score enough financial aid to pay for four years of education at the one college the student really wants to attend. In some cases, this may actually turn into a dream come true if the student is exceptionally talented, gifted or athletic. For most families, though, the selection process can be somewhat murkier than it appears at first glance.
After receiving your FAFSA information, each college will assess it using their own particular guidelines. They may be trying to attract certain types of students to their institution, or they may have a large endowment fund which allows them to offer particularly attractive scholarships in certain areas of study. In any case, each college will put together a financial aid offer, which is then sent to the student for consideration and possible acceptance. Depending on the individual colleges involved, the student may receive offers which appear to be very different in nature.
While it is great if your student receives several offers, your family must take time to carefully compare one against the other. On the surface, some families may be tempted to accept the offer which looks like it includes the highest dollar amount of financial aid. But it is always good to take a pause, and look for any hidden surprises to make sure one offer is truly better than the others. Here are some questions to consider when comparing offers from different colleges:
• What is it really going to cost us? You must first know exactly what it will cost your family to send your child to each college. Add up the cost of tuition, room and board, any travel expenses, and personal expenses, and then subtract the financial aid amount from that to determine how much out-of-pocket money your family will need to pay. Your student may receive $25,000 in financial aid from a large, out-of-state college, but you will still have to pay $10,000 in out-of-pocket costs when everything is taken into consideration. Or your student might only receive $10,000 in financial aid from an in-state college which is closer to home. This might result in your family only having to pay $5,000 in out-of-pocket expenses. Which option is better for your financial situation?
• Will this support be available for the entire time my student attends this college? Look for any indicators that a scholarship or grant will not be available for the entire time your student attends a specific college. In most cases, the offer is consistent for four years if your student meets academic requirements but, on occasion, there might be an offer that can get reduced after the first year. Be aware of the percentage of students that actually graduate in four years from each college. If your student requires five years to graduate, that fifth year could be extremely costly. Inquire about what happens to specific scholarships if your student decides to switch fields of study. If your student commits to a military ROTC scholarship, you may be responsible for repayment if he or she does not fulfill the requirements.
• How much are we borrowing in student loans? Some financial aid packages look like they might be able to cover the costs of a specific school but, when you read further, you discover that they include substantial amounts of loans for the student and the parent. When multiplied by four or five years, this could cause a financial burden on the family after graduation. The parents will have to estimate their earning power down the road, and compare that against their other financial obligations. And the student will have to be sure that attending this school will provide an education which results in job opportunities that will allow him or her to repay any loans involved.
It is a great joy to receive those acceptance letters and know that your many, long years of hard work are finally paying off. But don’t let that happiness keep you from making a smart financial decision about the next four years.