Evaluating your financial aid package can be confusing but Financial Aid Advisor Jodi Okun has 6 tips to help you evaluate your awards and maybe even find new sources of funding.
Evaluating financial aid packages can be tricky because they are not standardized. Schools use different formats when presenting awards to families and the terminology in these packages can be bewildering.
There are ways, however, to determine which offers are the best. The bottom line is the extent to which the financial aid award lowers your actual out-of-pocket cost to attend the college.
Here are six tips to help you evaluate financial aid awards.
1. Don't assume that the cost of attendance is correct. Financial aid letters should include the school's official "cost of attendance," or COA, which is the estimated price for the upcoming academic year of college. A typical COA will include tuition and required fees, room and board, books and supplies, and transportation and other personal expenses.
Although schools follow federal guidelines when creating student budgets, their methods for calculating these budgets may differ. For instance, expenses covered under "transportation" may vary (one school might include the cost of only local transportation vs. trips home for breaks); some colleges may include a computer under "supplies," call it out separately, or not include it at all.
The COA is an estimated average, so you shouldn't assume that it will be precise for your family. If you believe your expected costs will exceed the COA listed in the award letter, contact the financial aid office to discuss a possible adjustment, which could increase the amount of aid you receive.**
2. Look for grants and scholarships. The most valuable financial assistance in your award will be "gift aid," which includes grants and scholarships that don't have to be repaid. You should ask the school whether these awards are renewable for all four years of college -- usually they are -- and under what circumstances. Many schools will require that students maintain a certain grade point average to keep the award in subsequent years.
3. Focus on the net price. When comparing different financial aid offers, you need to determine what the net cost will be for your family. The net cost -- not the school's COA -- is most important because that will be your actual out-of-pocket cost to attend. Loans and work-study are considered financial aid, but they do not lower your true out-of-pocket cost in the long run. To determine your net cost, subtract any gift aid from the cost of attendance.
4. Look at loans. All financial aid is not equal. A $10,000 award including $5,000 in loans and $5,000 in grants is much less desirable than a $10,000 award that is composed only of grants -- even though on the surface they both look like $10,000 awards. While loans don't lower your net price, they are often necessary. Two loans to look for are the federal subsidized Direct Stafford Loan and the federal Perkins Loan. They have low interest rates and the federal government will pay the interest that accrues while the student is in college. The unsubsidized Stafford also has a low interest rate, but the government doesn't cover the interest.
5. Ask about private scholarship policies. If you receive an "outside" scholarship from a private corporation, community group, or other entity, the college may reduce your financial aid award. Ideally, you want a school to reduce loans in your financial aid package rather than grants. Ask each school how it will treat any outside scholarships.
6. Ask questions. If you are unsure about expected costs or any aspect of a financial aid offer, don't hesitate to contact the college financial aid office.