We spend a lot of time talking with our students about finding the right fit. We encourage students to look for a college environment that fits them socially and academically. And we talk about which colleges have a price tag that fits their family’s financial situation.
This is the time of year when all those conversations come to life. Most acceptance letters have flowed in and, with them, financial aid award letters. Award letters reveal a student’s financial aid package, showing the full cost of one year’s attendance, as well as any grants, scholarships, and loans that can be applied to a student.
Financial aid award letters can be confusing. It isn’t always easy to tell what is free money (scholarships and grants) and what is borrowed money (loans that will have to be paid back). And because few letters look exactly the same, it can be difficult to look at all of your options and be sure you’re comparing apples to apples instead of oranges.
Let’s take a look at what’s usually included in a financial aid award letter, clear up some confusion about types of money, and address steps you can take if your financial situation has changed.
DECODING THE AWARD LETTER
Most financial aid award letters include the following information:
Cost of Attendance (COA) - The price of one full year of school. This includes tuition and fees, room and board, and even estimates of other expenses like books and transportation. If the COA is not listed, try to find it on the college’s financial aid website.
Institutional Grants - Free money that does not have to be paid back. Usually need-based.
Institutional Scholarships - Free money that does not need to be paid back. Can be need-based or merit-based
While students can apply for outside scholarships, these will not appear in a financial aid award letter from a college.
Federal Work-Study - Earned money in the form of a part-time job on campus. It does not need to be paid back but is not paid upfront.
Federal Student Loans - Money borrowed from the federal government that is paid back with interest. Federal Student Aid explains the different types of loans and the amount you can borrow per year.
So what do you do with all of this information?
You’re looking to determine the college’s Net Price.
The Net Price for one year of college is the full COA minus any free money. Remember, student loan amounts lower the COA in the short term, but you will have to pay them back over time and earned money (work-study) is paid to students over time to supplement their income.
COA - FREE MONEY (IE: GRANTS & SCHOLARSHIPS) = NET PRICE
The easiest way to compare financial aid award letters is to make a spreadsheet that compares each college and the types of aid offered. Make a copy of our template to use for yourself.
The difference between COA and any financial aid leaves families with an uncovered amount of money called a gap. This is the amount a family will have to pay from savings, outside scholarships, and/or private loans.
APPEALING YOUR FINANCIAL AID PACKAGE
If your financial aid package is insufficient or if your family’s financial situation has changed, you might consider appealing your financial aid package. It’s important to communicate these changes to colleges as soon as possible because they may be able to offer more money.
To appeal your financial aid package, you’ll want to contact each financial aid office to learn their appeals process. In many cases, parents will write a concise, polite letter that explains the special circumstances your family is now in.
How can we help?
We see our students through the entire college planning process, including navigating the waters after being admitted. If you have questions about your financial aid offers, get in touch with us so we can help!