Deciphering the financial aid award letter

Deciphering the financial aid award letter

By Aaron Lamon Ashford, M.Ed. - TPC Educational Consulting

 

 

 

§  Students and parents must do their homework You file your income tax return, and then you complete the Free Application for Federal Student Aid, or the FAFSA. Next comes the award notification and the questions, ‘why is more now less, and less is just less?!’  Often times, college financial aid awards can seem to be less generous than they appear. Students and parents need to take a close look at the actual type of aid they are receiving, and the terms. According to the executive director of financial aid services at The College Board, Myra Smith, “gift aid and loans are very different. And even within loans there are big differences.  It can be hard for families to decipher the information without sitting down and thinking about it.” Other details can cloud the value of an aid package as well.  Are the grants and scholarships renewable? Are they hinged on maintaining a particular grade point average?  Can they be extended if it takes longer to graduate? As the award letters begin to come in, watch for these big figures: the school’s estimated cost of attendance, the total amount of aid awarded, and what needs to be paid out of pocket. Here are some things to keep in mind when looking past the numbers. {{more}}   TOTAL COST OF ATTENDANCE                 When looking at the total investment in your or your child’s education, there should be no surprises. However, the cost of attendance shown in the award letter does include estimates for books, supplies, fees, and living and transportation expenses.  Depending on the student, those estimates can widely vary.  Thus, you could pay more or less than the school’s projection.                 Living expenses vary also. Does the student live at home or on campus?  Does the student live in campus housing, or on their own? Is the student a resident of that particular state, or out of state? These factors among others can skew the costs.  Parents should be better aware of the spending habits of their student than the school.  Even books and supplies can significantly sway the costs, depending on the major.                   GRANTS & SCHOLARSHIPS                 A key dynamic to look at is the amount of gift aid being awarded – money that does not need to be repaid.                  Academic benchmarks must be achieved and maintained in order to continue receiving many grants and scholarships, so students need to be certain of those.  Holding on to grants and scholarships is not automatic due to lifestyle adjustments, course and scheduling adjustments. Even for students with shining academic records, this can be semester to semester.  Make sure that the award is renewable for all four years.             State or federal grants are need based and need to be reapplied for each year. Changes in a family’s financial status have a bearing on whether or not the grant can still be available, and for what amounts.   LOANS Families can often lose focus on the toll loans can take following graduation.  Schools no longer include private loans as part of their awards, but federal loans still comprise 43 percent of aid packages, according to The College Board.  There are several types of loans whether they are private or federal. The Stafford Loan is the most common, and anyone may qualify. Loan limits depend on the student’s classification and whether they are dependent or independent. The two types of Stafford Loans are subsidized where the government pays the interest while the student is enrolled in school, and unsubsidized, where interest accrues while you are enrolled in school.   All this takes is doing your homework and becoming as knowledgeable a consumer as you can. Be responsible for asking questions of your school counselor, your college of choice, or an independent educational consultant. And by all means, become a friend, not an adversary of your college’s financial aid office.  They can be a long term advocate.