May 1st is approaching–the deadline for accepting or declining your college offers of admission. Most colleges abide by this deadline and if you haven’t made your decision yet, there’s no time like the present. Responding past the deadline may mean that your offer of admission is withdrawn.
Before you accept however, you will need to compare financial aid awards. Why? You want to see which college is the best financial choice, even though you may opt for another. It’s wise to have the comparisons in hand before you send your acceptance off to the college you choose.
What is an award letter?
If you filed the Free Application for Federal Student Aid (FAFSA) you will receive a financial aid award letter from the colleges who offer you acceptance. Most award letters list these basic components:
- The full cost of attendance, broken down into expenses: tuition, room and board, textbooks, and even transportation.
- Grants and scholarships
- Student loans
- Work study
- Net amount you pay after this aid is deducted
- Expected Family Contribution (EFC)
If a PLUS (Parent Loan) loan is listed as part of the aid, don’t be fooled. Some schools list it as a part of the aid package, but don’t compare this award with other colleges who do not. PLUS loans shouldn’t be part of the financial aid award. Parents can take out this loan if they pass a credit check and it really doesn’t mean you’re getting more aid.
How do you evaluate and compare award letters?
If you take the components of the letter, it should make it easier to evaluate. First, determine the school’s real cost of attendance. As of 2011 each college in the United States is required to include a Net Price Calculator on their website to provide an estimated total of their institution’s annual cost to attend. When doing your research, use each school’s Net Price Calculator to compare the costs listed on your child’s award letter. Examine the letter closely to make sure the amount on the letter coincides with the amount posted. If there is a discrepancy you may want to contact the college.
Next, look for the free money in the form of grants and scholarships. Free money can come from the federal government, state government and even the colleges themselves in the form of grants and scholarships. This is money you will not have to repay.
Look for the student loans next. Don’t forget that student loans must be repaid so you should check loan repayment calculators first before accepting them. Will you be able to pay the loans back after graduation? What will your payments be? Most loans have a grace period after graduation for six months. Loans can be deferred if you continue your education after college, but the interest will continue to accrue.
After examining this information you should be able to take the true cost of attendance, subtract the grants, scholarships and loans to determine what you will pay to attend. The best aid packages are heavily weighted with grants and scholarships.
Many colleges are now using the new Financial Aid Shopping Sheet created by the U.S. Department of Education. This sheet breaks the award down clearly, including all the information you need to evaluate the award. If the college doesn’t include this, you can print out your own copy and transfer the data they provide.
For some good examples of award letters and how to decipher them, follow these two links to The College Solution blog: What’s Wrong With This Financial Aid Letter and Are These Financial Aid Letters Misleading?
Is the college “gapping” you?
Gapping occurs when a college offers admission but doesn’t back it up with financial aid: the college doesn’t offer enough aid to cover your Expected Family Contribution (EFC). Gapping often occurs when the student is at the bottom of the applicant pool. The gap between the EFC and what the college offers can often be thousands of dollars. If a college is gapping you, consider choosing another college that is offering admission with a better financial aid package.
What do colleges often exclude from the letter?
Even though the colleges offer scholarships and grants, they may neglect to provide information about the requirements necessary to keep the scholarship. It might not be clear if the awards are renewable for the entire four years or if they require a specific GPA, enrollment requirement, or certain income level. Always ask the college if these aren’t included in the letter. Colleges reevaluate financial aid every year and you need to know if these awards will be offered again or if they are a one-time offer to incoming freshmen.
How do you make the final decision?
Compare the colleges side by side and make the best financial decision for your family. Which college gives you the most aid, apart from loans, allowing you to graduate with minimal debt? However, the final choice should be a combination of what you will pay, what you want academically, and which college will be the best fit for you. While the money is an important component of the decision, so is your overall happiness.