09 Feb How to Interpret Those Financial Aid Award Letters
As most families of high school seniors know, there are many steps to the college application process. It is a long journey from the initial thought of “where do I want to go” through road trips, tests, applications, financial aid application and scholarships, but the trip is almost complete. The colleges your student has been accepted to have reviewed the information provided in your FAFSA, and made their financial aid determinations. This information is provided to you in the form of a financial aid award letter.
Unless your student has received a “full ride” at a chosen college, you need to pay close attention to these letters. Compare them against each other to determine exactly how much you will be paying, and use this information in your final choice of where to attend. Here is what you should look for in your financial aid award letters:
• Cost of Attendance (COA): This is the college’s best estimate of what it costs the typical student to attend their college. It usually includes the cost of tuition and fees, along with room and board and other expenses, but it may not be exactly what your student will pay. Look closely at this amount and determine if there are any differences in your situation. If your student will travel a long distance, commute, or room off-campus, this could affect your out-of-pocket expenses.
• Financial Aid: There are several components to the financial aid award – federal, state, and institutional. Within those amounts, there are several different forms of aid as well. Look very closely at the type of aid that is being offered. Scholarships and grants do not usually have to be repaid. The federal work-study program requires your student to work part-time while attending college. Identify any amounts that are listed as loans, either for the parent or the student, and realize that you will be required to repay those amounts, usually upon graduation.
• Expected Family Contribution: This amount was originally determined by the information you provided on the FAFSA. Depending on the college and your specific family situation, the final amount listed on the award letter may be higher or lower than what you received on your Student Aid Report (SAR). Realize that this is money you will be expected to pay out of your savings, or from other sources.
Even after the financial aid awards and EFC have been taken into consideration, there might still be something that is known as the “gap amount.” This is the amount not covered by any expected forms of support, and it should play a role in the final college choice. In many cases, families choose to cover this amount with private student loans, but you should understand that those loans may be in addition to the federal student loans you are already receiving. Think about how much you will borrow in full, and make sure your family can pay it back before accepting any financial award package.