You’ve submitted your Free Application for Federal Student Aid (FAFSA)
and now you’ll soon be receiving financial aid packages from your top-choice colleges. Your financial aid package is very important, as it provides you with the cost details for you to attend a specific college. It’s a compilation of financial aid from various sources, based upon your financial need; highlighting the Cost of Attendance (COA) and your Expected Family Contribution (EFC) difference.
It’s likely your first exercise in cost planning, and it can be tricky! Adding to the complexity, and according to US News
, “College financial aid officers say that while there are many similarities between how schools award aid, each has its own unique process for processing applications and awarding aid.” Talk about confusing; how do you know you truly understand and are correctly comparing each package appropriately?
Here’s what you can expect in your financial aid package and some clarity to each approach. First, understand there’s no standard formula or presentation of financial aid packages
. If you’re comparing financial aid packages to make a final decision based upon cost—be careful. You’re more than likely not comparing apples to apples.
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It’s also a good idea to benchmark the cost of colleges you’re considering prior to reviewing their proposed financial aid packages. See how the college you’re considering compares nationwide with the U.S. Department of Education’s College Scorecard
Ask Yourself These Questions
Does this financial aid package reflect the college’s final 2021-2021 tuition costs? Did you meet your state priority deadline?
Many colleges and their associated state budgets are not solidified at the first of the year. State governments have a bit of time to adjust allotments, higher education included.
The National Association of State Budget Officers
mentions nearly all U.S. states are currently working on or enacting new budgets for the fiscal 2021 year. Most states’ 2021 fiscal budgets begin July 1, 2021 through June 30, 2022.
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Public college administration does their best to stay aware and forecast amounts that will be set aside, but nothing is final until signed by a state’s governor. A state's public education funds support many functions from campus upkeep and salaries, to special programs AND the state-funded financial aid you may receive.
Aligning the FAFSA to the prior year gives financial aid offices the ability to send your award packages to you early. Your financial aid packages typically include state specific, financial aid funding, assuming you submitted or will have submitted your FAFSA according to your state’s priority deadline
So, what IS a state, priority deadline?
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Let’s go back to the budget: A portion of the money set aside supports grants and programs open to state residents only. Once this reserve is gone, it’s gone. It’s truly distributed on a first-come, first-served basis.
Room & Board, Credit Hours, Work Study
Does tuition include room and board or credit hours only?
Some financial aid packages use an all-inclusive tuition approach, meaning they include your room and board in the estimated tuition. Be careful when you’re comparing or considering offers. Make sure you understand what your tuition includes.
Does the cost of tuition include textbooks?
It’s easy to forget about textbooks when considering the cost of college, and most colleges do not include this in their cost of attendance.
Ask the financial aid office what the average cost of textbooks was for freshman students last semester. TIP: If the college you’re interested in has a textbook rental program, take advantage of it. This will stretch your dollar further.
How many credit hours is your estimation based upon?
Some colleges keep their financial aid package quote within the basic, 12-credit hours per semester. While some choose a more aggressive approach at 14/15-credit hours per semester. TIP: The 14/15 credit hour approach is typically a university’s strategy to help you graduate within four years, with less debt -- a benefit to you.
How many jobs are available for on-campus work study?
If your award package includes work study, know this is not a guaranteed job. It’s also important to note, if you do land an on-campus job your paycheck will help you cover more of the daily expenses related to attending college—not tuition or housing. This U.S. Department of Education blog
highlights other things you should understand when considering the Federal Work-Study Program.
Define Scholarship Offers
Many colleges use scholarships in their financial aid packet as motivators. Be sure to ask and assess the following questions:
Does your package include non-competitive or competitive scholarships?
Non-competitive scholarships are usually funded by the university itself and guaranteed. Here’s the caveat: while guaranteed, the non-competitive scholarships could have a cap, meaning the college has a state-set amount for the year they can award.
Once this has been met, your non-competitive offer could adjust accordingly. Don’t be afraid to ask the college’s financial aid counselor for details on caps.
Can you combine a non-competitive or university specific scholarship with other, competitive scholarships?
Competitive scholarships are often funds supplemented outside of the university. They’re also awarded to a limited number of qualifying students.
Competitive scholarships are what some families and students use to bridge the financial gap that results from your college-proposed, financial aid package. Some colleges will reduce their non-competitive scholarship payouts if you’re awarded competitive scholarships.
Is the non-competitive scholarship renewable for additional semesters? If so, how many?
Understand and compare the value of each before you accept any non-competitive scholarships. For instance, University A may offer you a $5,000 non-competitive scholarship for your freshman year only (considering you do not have competitive scholarships to claim).
While University B may offer you a $2,000 non-competitive scholarship your freshman and sophomore year even after factoring in your $10,000 competitive scholarship. In this case, University B would be your best value.
Loans Included in Your Financial Aid Award Package
Colleges want your business. They can be creative with your financial aid award package, by including loans to offset your out-of-pocket expense. The out-of-pocket cost is the amount you’ll have to pay or borrow to attend the college. It’s also the difference between the cost of attendance and the gift-aid (scholarships/grants/work-study) portion of your financial aid-package.
Loans help many students and their families with the finance gap. Remember, loans must be paid back. Subsidized loans are need-based, that have a six-month grace period after graduation. Private student loans, the unsubsidized Stafford and PLUS loans, are forms of aid not based on financial need and are available to everyone.
These loans are intended to help families pay for their EFC, or out-of-pocket costs. Find out more about student loans and details about each type of loan on the Federal Student Aid Website
Award Letter Comparison Tools
Access these handy tools to get a side-by-side comparison of your financial aid award packages.
The Simple Award Letter Comparison Tool
compares the financial aid packages from three colleges, highlighting any significant differences. The tool also calculates the net cost and out-of-pocket cost figures defined above and estimates the lifetime cost of any education loans.
The Advanced Award Letter Comparison Tool
is like the Simple Award Letter Comparison Tool, but includes non-financial criteria in addition to financial criteria for comparing colleges, letting you see the differences visually in a matrix format.
Accepting, Appealing, Rejecting Your Award Letter
Once you’ve asked the questions mentioned above and have done your research you may be asked to return a signed copy in which you accept or reject each source of financial aid. If you reject loans, know the college will not increase aid for declined loans. You may also be asked to return or respond within a certain time frame. Should you decide to appeal your award letter, this Fastweb article gives you three tips to appeal your financial aid package
College financial aid offices are great resources if you run into specific questions. As they designed their award packages, their staff are THE experts in interpreting and answering questions you may have. Don’t be afraid to reach out—consider them your partners!