Comparing Financial Aid Offers

By now, you've received many acceptances, and in some cases have already received your financial aid offers. How do you determine which offer is the best financial deal for you? Most colleges to promise to meet your need—defined as the difference between your Expected Family Contribution (EFC) and the "total cost of attendance." However,  colleges have options for HOW they meet your need, including grants, scholarships, loans, and so on.  Also, not every college includes the same elements in "total cost of attendance." 

So, since you want to maximize the amount of free money you're receiving, let's break down the elements of an award letter.
  • Cost of attendance--this section tells you how much it costs to attend the university. It always includes tuition, room and board, any mandatory student fees (e.g. health, registration, etc.). Most colleges will also list an amount for books, travel, and incidentals, but some will not list all of these.  When you are comparing one college to another, make sure the same budget items are included.  
  • Scholarships--If you are receiving any scholarship money, they'll be listed. Scholarships may be need and/or merit based, don't need to be paid back, and are usually renewable for all four years. There may be grade or other requirements in order to renew.
  • University Grants--Also free money--this is discretionary money from the university--dollars they add to round out an offer.
  • Pell and/or Other Government Grants--These are government provided funds that do not need to be paid back--they are almost always need based funds for low income students.
  • Federal Loans--Stafford Loans may be subsidized (government pays your interest while you are in school) or unsubsidized (interest accrues and is added to principal in the end). There are annual limits as to what can be borrowed each year, based on year in school. Perkins loans are low interest subsidized loans offered to low and middle income students.
  • Work Study--a government program that provides matching funding for student jobs.
When comparing offers, make sure that you are comparing like line-items. First make sure that all costs are included in "cost of attendance." For example, if you live in Ohio and plan to go to school in Washington State, make sure you factor in enough for travel (the same at every school) when doing comparisons.  That means you may have to ADD in money to make the budget line items the same.

I recommend creating a little spreadsheet that puts all the items from each college into a single place and makes it easier to compare.

Then, look at the proportion of "free" (grant/scholarship) money to loans. Remember that Federal loans, even the parent loans (PLUS-parent/student), are considered aid! You want to minimize the amount of money needing to be paid back.

Also look for gaps. Some colleges do not guarantee to meet need, and you may find yourself scrambling to bridge the gap between aid and the true cost of attendance.




If you're in the Los Angeles area, come to my workshop at Fairview Library in Santa Monica on April 5th at 7pm!

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