Apples and Oranges-Evaluating Financial Aid Offers


Acceptances are rolling in, and along with them, financial aid letters showing how each college will "meet your need." Most colleges promised to meet full need with the package--the difference between your Expected Family Contribution (EFC from the FAFSA) and the total cost of attendance. Take a look at the sample at right (click on it for a larger view).

This hypothetical student's family had an EFC of $10,000, and this college promised to meet 100% of need.

What are the elements of a financial aid offer 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.
  • 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.

Then, look at the proportion of "free" (grant/scholarship) money to loans. 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.

These are all factors to take into consideration when deciding which college to attend.

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