Comparing Financial Aid Packages

If you’ve applied for financial aid and filed all the paperwork by the appropriate deadline, an award letter outlining your student’s offer of financial assistance should arrive close on the heels of the notification of acceptance. Here’s a guide to understanding what that package really means:

The bottom line in comparing financial aid packages is the ultimate cost of education to the student and family. Since the total cost of education varies for each college, families will need to compare packages in terms of several factors. First, compare the ratio of grants (gift money) to loans for each school. Packages with larger grants than loans are obviously more desirable. Next, consider how much your family is expected to contribute and compare this amount to your total grant award. Will your family be able to provide the expected amount, or EFC (Expected Family Contribution)?

Now, compare loan types offered and their terms. The most desirable loans are federal direct student loans with low, deferred interest; these loans do not have to be repaid until after your student has completed their education. Private, unsubsidized family or student loans generally require that repayment begins within 60 days of receipt of funds. Even when offered loans as part of the financial aid package, students are free to decline them. Many colleges offer Parent PLUS loans to help fill in the difference between the rest of the aid they offer and the cost of attendance. Parents should be careful not to take out loans that might impact their ability to retire.

“The final decision about college choice is a family decision, made by weighing numerous factors to determine the best choice for all of you. With skyrocketing college costs, finances may rightly count heavily in the final college selection.”

Some financial aid packages will include work-study. Students are also free to decline this type of aid; although there may be significant benefits to work-study employment, some students prefer to find their own jobs outside of the work-study program on or near campus.

Call the college’s financial aid office to learn how outside scholarships may affect the financial aid package. While some colleges allow students to use these in place of loans, other colleges subtract this amount from any grant aid that a student has been awarded. Ask, too, if your child is likely to be awarded a similar package in succeeding years, assuming family finances remain the same. Some parts of the financial package may not be renewable, and this could affect the cost of attendance in subsequent years.

The final decision about college choice is a family decision, made by weighing numerous factors to determine the best choice for all of you. With skyrocketing college costs, finances may rightly count heavily in the final college selection.