How to Evaluate Financial Aid Award Letters with Your Child

Financial aid award letters will be arriving shortly – if they haven’t arrived already. When you and your child receive these from colleges, you’ll notice that they contain quite a bit of information. Before you and your child make final college decisions, it’s paramount that you understand what is being offered in their financial aid package. Doing so will help you make the most informed choice possible, which can pay off for your family – literally.

How to Evaluate Financial Aid Letters

Evaluating the financial aid award letter is vital to helping make final college decisions. In doing so, you’ll fully comprehend the true cost of a college – or colleges. And though how much a college costs isn’t the only determinant of where your child should attend, it certainly plays a big role.

What’s in a financial aid award letter?

Before you learn how to evaluate a financial aid letter, you need to know what to look for. If – and when – you receive multiple letters, you’ll notice that there isn’t a standard format. The most important components of the letter that you’ll want to identify are the forms of financial aid: • Scholarships and Grants – These forms of financial aid do not need to be paid back. • Work Study – This form of financial aid allows students to work on campus in order to pay for tuition or earn money for student expenses. • Federal Loans – Finally, your financial aid package may include loans from the federal or state government. These forms of aid do have to be paid back after graduation.

Can I reject parts of the financial aid package?

Some colleges will include non-need-based aid on the financial aid award letter to cover up “gapping,” which is a term that refers to colleges who do not meet the full need of a student and cover it up by including non-need-based aid in the package. These forms of aid are unsubsidized federal loans, the Parent PLUS Loan, and private student loans. Some colleges may include them on the award letter to inform students and their parents of the borrowing options, while others may package them in a way that looks like aid to help them “meet their need.” Either way, it’s best to be informed about the possibility of gapping as well as these additional borrowing options, which are actually available to everyone regardless of need eligibility. You do not have to accept every component of a financial aid package. For instance, if there are loans listed, you can reject them. However, you will have to come up with another source of funding to cover the gap between what you can pay and what the college costs. Most schools will ask that you return the letter – or respond electronically – addressing which parts of the financial aid package that you accept as well as those you will reject.

How will I know if the financial aid package meets our need?

The point of the FAFSA is to determine how much a family can pay – according to the U.S. Department of Education. This is called the Expected Family Contribution (EFC). However, many families find that there is a disconnect between what the federal government says they can pay and what they really want to pay. Be prepared that your package will not meet 100% of your need – unless you are an especially needy family that qualifies for full assistance. Some colleges will provide the cost of attendance on the financial aid award letter. Others might list it on their website. If you can’t find it, call the financial aid office to ask for a detailed overview of the costs to attend. Cost of attendance is not limited to tuition and fees. Be sure that you’re finding prices for room and board as well as books and supplies, transportation, and personal expenses. Once you have the complete cost of attendance, you can determine how much your family will have to pay for tuition, after merit scholarships and financial aid. It’s best to do this with every college for which you receive a financial aid award letter so that you can figure which school will cost less. Mefa.org provides a great Net Price Calculator that allows you to compare the financial aid packages that you received at multiple schools.

What does the term “front-loading” mean, and how can I tell if that’s part of our package?

Front-loading is a term that describes the practice of giving out more grants during a student’s first or second year of college than their final years in college. While it does lower the cost of college overall, students and their families will be paying more for the education in the latter years than during the first. Be aware of this practice as you examine financial aid packages. Consider that what you’ve budgeted to pay for college during the first two years may need to look different in the years after. You may need to look into further options for paying for college in those years, like student or parent loans.

Questions About Your Financial Aid Award Letter?

Undoubtedly, questions will arise about your financial aid award letter. If you feel that something is unclear or you require more clarification about what your child’s package will look like over time, reach out to the college’s financial aid office. Financial aid employees are knowledgeable on federal, state, and institutional financial aid practices. Their job consists of helping families navigate the best way to pay for college without taking on a burdensome amount of student loan debt. Additionally, if you feel that your EFC is incorrect, or that the FAFSA didn’t accurately reflect your family’s current financial circumstances, you can reach out to your child’s financial aid office to ask for a financial aid appeal. This process if for families who have experienced events that were not reflected on the FAFSA, like job loss, debilitating illness, or a parent or guardian’s death. A financial aid officer can make a professional judgment in your favor, which could result in more financial aid to pay for college. This process requires documentation, but your financial aid officer will help you navigate the process and detail what you need to prove a change in circumstances. In short, reach out and ask for help if you need it. This will ensure that you all make a final college decision that is financially sound and feasible.