You've applied to colleges and for financial aid and now letters of acceptance, along with award letters, are arriving in the mail. The amounts of financial aid offered by the colleges you applied to may be substantial, but the amount of aid offered isn't always as important as the types of aid in the financial aid package. Deciphering these financial aid award letters is vital to evaluating your college options and choosing the school that suits you best. But calculating the value of an award letter and comparing it to other award letters can be confusing. The following are some tips that will help you decipher award letters and compare aid packages.
Start at the Bottom
At the bottom of each award letter, there will be a total financial aid amount calculated for each school you're considering. Compare this calculated financial aid award to the cost of attendance at the institution. Cost of attendance includes tuition, room and board, and university fees. A student's financial need (used to determine how much aid they get) depends on the cost of attendance, which varies with each school. Some schools may have a higher cost of attendance, but the actual cost to the student may not be so high because the financial aid package will also be larger. The difference between the aid package and the cost of attendance is what you will be responsible for paying. Compare the difference between financial aid and cost of attendance for each school that accepted you and try to estimate how much you will be able to pay for your college education. Organizing data in a spreadsheet is a great way to analyze and compare this information.
All Aid Is Not Created Equal
While weighing your options, keep in mind that grants and scholarships are free. Loans and work-study are also forms of financial aid, but loans have to be repaid and students must work to earn work-study aid. While a financial aid award letter may have the same total amount of aid, the package with more grant and scholarship aid is better because this money is free.
Be An Informed Borrower
If grants and scholarships don't cover the costs of attendance, you may need to take out a student loan. Make sure you understand the terms of that loan—the interest rate, the fees, and the repayment schedule. The federal government provides numerous loan forgiveness programs and flexible repayment options to help borrowers avoid defaulting on their loans. Make sure you are aware of these options in addition to the terms of your loan.
Like financial aid, all loans are not created equal. You need to know if your loans are subsidized or unsubsidized. This is an important detail. Subsidized loans are interest-free until after graduation, while unsubsidized loans begin to accrue interest right away. You may see a section with amounts listed under a "Parent PLUS Loans" title. These funds are available to parents who wish to borrow on behalf of their child and assume full responsibility for repayment—which can be deferred until after graduation without fees or penalties.
Work Study
There is also a possibility that you will be offered work-study as a way to contribute to the cost of your education. Pay is usually minimum wage, but working on campus is often a great way to interact with faculty and peers. Those who work on campus are also more likely to complete their college degree.
Consider All The Costs
It's important to consider all the costs associated with attending college. Besides tuition and fees, consider the cost of books, transportation, and personal expenses. Not only does the cost of college vary considerably, the cost of attending school in different locations can vary significantly. When considering a specific award package, remember that living expenses can be much higher in New York City than Atlanta.
Imagine All The Variables
Thinking ahead can save you headaches. Make sure the funding will cover all four years. Also, look for any conditions attached to the award, such as maintaining a certain GPA or staying within a particular major. Be sure they are terms that you are comfortable with.
After you have compared all the financial aid packages, take time to consider the schools you applied to. You have to think about the academic programs the school offers, the campus, housing and the local infrastructure. These are aspects that will largely determine the quality of your college experience. You should also consider your career path and how much you can expect to make after graduation. Choosing the right college will greatly impact your life so choose wisely.
