At this point in your senior year, you’re probably getting excited to find out where you’ll be accepted to college. As these letters start arriving, you will have to make some important comparisons of school offers to determine the best financial aid package for you.
So, before those you start hearing from colleges, it’s important that you understand how to read and interpret your award letters.
Not all award letters look alike. In order to properly compare one school’s award to another, you need to review them carefully. What you want to determine when looking at your award letter is how much you will need to borrow to cover your costs.
How much will you need to borrow?
When schools list the elements of your financial aid package, they may include student loans as part of the aid they’re awarding. But remember, student loans have to be repaid.
Look closely at how much of the award package is made up of student loans and how much is made up of aid that doesn’t have to be repaid (grants and scholarships, typically). One school may award you more aid that doesn’t need to be repaid, and less in student loans that do have to be repaid. Keep a careful eye on those figures. If you’re not sure whether an award is a loan, grant, or scholarship, contact your school’s financial aid office to clarify.
When comparing award letters, there are four main things you’ll want to understand:
- What are your total expenses for college? This should include tuition, room and board, books, fees, and personal expenses.
- How much of the aid awarded is money that doesn’t have to be repaid? This type of aid is usually in the form of grants and scholarships.
- How much of the aid awarded is in the form of loans? This money will need to be repaid, with interest.
- After tallying the total aid package (including all grants, scholarships and loans), how much is your family expected to pay? This is sometimes listed as “Expected Family Contribution.” Consider whether you will be expected to help cover this cost in some way.
Once you know these things, you can use this simple equation:
– Free aid
Total amount you’ll need to borrow, work to earn, or get from your family contribution
Using this simple math, you can more easily compare your award letters by looking at how much you’ll need to borrow to attend each school. Remember to contact your school’s financial aid office with any questions you may have about your award letter.