High school students are preparing for college and admission letters are finally rolling in. Now students and their families are getting ready to receive their long awaited financial aid award letters. This is one of the most exciting, and sometimes stressful, moments. Colleges often send out different offers with varying amounts of financial support, and it can be tricky to figure out which one is the best option for you. With tuition and other expenses quickly adding up, it’s crucial to compare your options carefully. Here’s a step-by-step guide on how to read a financial aid award letter without panic.
1. Compare the Total Cost of Attendance (COA)
The first thing you’ll want to compare is the Total Cost of Attendance (COA) for each college. This includes tuition, room and board, textbooks, fees, transportation, and personal expenses. Each school might have a different COA, and it’s important to understand the full picture before you decide.
Once you have that total cost, then subtract any grants and scholarships offered, as well as any savings your family plans to apply to this year’s costs. The amount that remains is your out-of-pocket cost for that school. This is the most important number to focus on, not just the total aid amount listed in the award. Now that you know what you will be responsible for paying for each school, it helps to evaluate each award offer more clearly and accurately.
2. Focus on Grants and Scholarships
Grants and scholarships are the best forms of financial aid because you don’t have to pay them back. They’re considered “free money,” and they should be a major factor when comparing packages. If one school is offering a larger grant, that’s free money you don’t have to worry about repaying, and it can make a huge difference in the total cost of attendance.
3. Understand Loans
Loans are another part of your financial aid package that you need to take seriously, as this is money that must be paid back, typically with interest. When comparing offers, look closely at how much you’re being offered in student loans, and what your out of pocket expenses are for that school. Also, pay attention to the interest rates on loans and repayment terms.
4. Work-Study Jobs
Work-study is a great way to earn money while in school, but it’s not free money. These are part-time jobs that you can use to cover some of your living expenses or other costs, but remember that you’ll have to work for this money. This can be a great way to offset some of your costs, but it’s important to realistically assess how many hours you can work while balancing your studies. When comparing work-study offers, check the amount of money you’ll be able to earn and whether you feel comfortable fitting those work hours into your schedule. If manageable, this is a great way to gain experience and earn money without taking on more debt.
5. Look for Additional Fees or Hidden Costs
While you’re comparing aid packages, don’t forget to consider other costs that might not be included in the initial aid offer. Some schools have additional fees for things like technology, transportation, student health services, or parking.
6. Think Long-Term
College is an investment! It isn’t just a four year commitment when you take out loans, as students will likely be paying on loans well after graduation. Compare offers carefully and ask these crucial questions:
- How much debt will I graduate with?
- How much, if any, will parents borrow?
- What are expected starting salaries in this field?
- Does this choice leave financial flexibility after graduation?
You don’t want to make decisions now that will negatively impact you in the future. If you’re unsure how to interpret an award letter or compare loan options, you don’t have to figure it out alone. I’m always here to help you make sense of your options and build a financial plan that works for your family.
More about Jodi and College Financial Aid Advisors
Jodi is a FAFSA financial advisor who helps with the financial aid process to help families of college students maximize their financial aid. From completing the FAFSA and completing the CSS Profile to reviewing the SAR, responding to requests for verification, comparing financial aid offers and understanding student loan options, Jodi is a fantastic resource when it comes to student financial aid. Schedule a 15 Minute Power Chat to learn more about finding ways to pay for college.