Careful Reading Those Financial Aid Award Letters
With acceptance letters comes financial aid award letters. These are just as important for college-bound seniors who must make their college choice by May 1st.
Ideally, a financial aid award letter should tell you:
- The total cost of attendance at the school. This is tuition, fees, room and board and estimated charges for books and other incidentals (for instance, a computer, software or transportation home). If the school tells you only the costs for tuition, fees and room and board–these are charges payable to the school–then add between $4,000 and $6,000 to your costs depending on how far the school is from your home.
- Grants and/or scholarships received. This is the part of the financial aid award you do not need to repay. Some scholarships might be need-based, others merit-based. Make sure you know. Also make sure you know the GPA requirement to renew the merit-based aid.
- The difference between the total cost of attendance and the grants/scholarship received. This is the amount you’re responsible for.
The next part of the letter are options that you may accept or refuse in order to cover the balance of your costs.
- The amount of the Federal Stafford Loan the student qualifies for. This should also include the interest per month a family will need to repay for the unsubsidized portion of the loan. The subsidized portion of the loan for a freshman can be as high as $3,500. The unsubsidized portion can be as high as $2,000. The interest a family will need to pay on the unsubsidized portion is around $25 a month.
- The Work-Study award. This is the maximum the school will allow a student to earn in a Federally-funded Work-Study job, usually on campus. A student might be able to earn more at another position, but sometimes a Work-Study position will relate to a student’s academic or career interests.
Then the letter should explain if any additional balance cannot be covered through programs administered through the school. This is the difference a family will need to make up on their own through cash on hand, a private lender or the Federal Parents PLUS Loan program. Hopefully you can pay cash or, better yet, nothing at all.
If anyone would like to send me good, or even horrid, examples of financial aid award letters, contact me. I’d love to read them.
I think this advice is very good. Too many families do not understand how financial aid award letters can differ so much from one college to another. They also don’t always understand the money their student is awarded in terms of whether it needs to be paid back or not. The more they know, the better their college decisions will be.
Agree. This is great and timely advice!