As we wind our way towards the end of the year, high school seniors start making the transition from application to acceptance and decision-time. Unless some new inspiration suddenly strikes, all of the college admissions and financial aid applications should be completed by now. The focus shifts to waiting to hear back from various colleges with news about the hoped-for acceptance.
Once the jubilation of getting into a preferred college begins to die down, though, it starts to dawn on the excited families that there is a financial aid award letter to be considered as well. These enigmatic documents can hold the answer to parents’ questions about what this whole college experience is really going to cost. There are some changes from school to school, but here are things you should look for in each letter:
- Understand the meaning of grants and scholarships: These are amounts that go toward the cost of college, and are usually merit-based or need-based. In most cases, these will not have to be repaid unless your student does not continue to meet the award criteria. Look to make sure these offers apply to all four years, as some colleges will front-load grant amounts to entice acceptance. Also find out what happens if your child has to attend longer than four years to receive that degree.
- Watch carefully for loan amounts: These can sometimes be carefully disguised, but anything that says Direct, Subsidized, Unsubsidized, or PLUS is a loan that will have to be repaid after graduation. Loans do not actually cut the cost of attendance – they just defray payment of certain sums, and add interest on top of the principal amount. Take the cost of these payments into consideration when choosing a college. Find out how many students actually graduate with your child’s major, if they go into jobs in their chosen profession, and whether they will be able to earn enough money to cover these loan payments.
- Know what work-study means: There is a chance that your student will be expected to work as part of the financial aid package. This is not a bad thing, in most cases, but it is important to ensure that your student has the capability to invest a certain amount of hours each week in a work environment that could take away from study time.
- Know the net: The difference between the total cost of attendance and the financial aid awarded by the college and the government is your true net price. This is not always obvious in the information provided. In addition to the known quantities, such as tuition and fees, you also want to consider such costs as books, room and board, transportation, and personal expenses, to get a real feel for what you will be paying. Some help for comparing costs can be found on the U.S. Department of Education’s College Navigator While one college might look a little more generous in its grant and scholarship awards, it could still cost you more through loans or out-of-pocket to attend.
- Outside scholarship policy: If your student has earned a significant private scholarship, be sure to find out the college’s policy on scholarship displacement. Some colleges will actually reduce their grants if the student wins a private scholarship, which could end up being a wash to your budget planning.
Rank the various financial aid award letters against your family’s budget for the next few years. Discuss with your student the emotional and financial aspects of each college, and be sure any work and loan repayment responsibilities are completely understood. Comparing costs can help make a wise college choice for the entire family.
CFAA helps with every step of the financial aid process, from completing the FAFSA and completing the CSS Profile to comparing financial aid offers and making the best choice for your family. Set up a CFAA new client free strategy session to learn more about finding ways to pay for college. To get the latest financial aid information and college application to-do lists, look for my weekly JustAskJodi emails and check out my monthly CFAA e-newsletter.