Financial Aid Award…Letters?

It’s almost the end of March, and hopefully by now most of you have filed your FAFSA to apply for federal financial aid in the upcoming school year. If you haven’t filed it yet, hurry up! Deadlines are either fast approaching or already passed. Go to www.fafsa.gov to fill it out and submit it.

After you get the FAFSA filed (and any other forms your school requires!), you’ll receive notification about your financial aid awards. In an award…letter? Well, not always. More often than not, this notification now comes in the form of an email, which prompts you to log into your school’s website to view your actual awards. And there are a few things you should know before you start to comparison shop.

1.       The number that is most important to you is the out of pocket expense. To find that number, you need to locate the total cost of attendance (which is MORE than just tuition!) at your school, then subtract the financial aid your school is offering. You can find the cost of attendance on UtahFutures.org if you need to compare several schools at once.

2.       Know your financial aid types. Gift aid doesn’t have to be repaid—it’s free money. Grants and scholarships are gift aid. Work-study aid is basically self-help aid, where you have an on-campus job to help offset the cost of college. And student loans are, well, loans. PLEASE don’t forget this! You will have to repay the money, plus interest, that you borrow in student loans. And even though having an extra $3,000 for living expenses seems awesome…that money is going to garner you an extra $677 in interest* over the life of the loan. If you borrowed an extra $3,000 in interest every year you’re in school, by the time you graduate with a bachelor’s degree, that’s an extra $12,000 in loans plus $4,572 in interest*. Yikes.

3.       Organization is helpful. If you have applied to several schools, it’s a good idea to have a spreadsheet or at least a piece of paper where you can keep track of a few key numbers. For each school, make sure you know what the cost of attendance is, the gift aid (grants + scholarships offered), the self-help aid (student loans + work-study), and the total out of pocket expenses. Once it’s all laid out in front of you, it’s easy to see which school is the best value for your family.

4.       An apple isn’t always an apple. You know the phrase, “an apples-to-apples comparison?” Sometimes a financial aid “apple” doesn’t always look like the “apples” on other financial aid award letters. For example, if Captain UHEAA applies to three colleges (A, B, and C), he’ll get an award letter from each school. He might be offered a Direct Stafford Loan from all three schools, but A University might label it “Direct Stafford Loan,” B College might call it “Drct Stffrd Ln,” and School of C might say it’s just a “Ln.” The bottom line is, if you aren’t sure about what you’re looking at on the letter, either go in for a visit to the school or give them a call BEFORE you make any decisions.

5.       Accept your awards. After you know what everything on your award letter really is, it’s time to accept the awards you want (like grants and scholarships, because they don’t have to be repaid!), and notify the school. You can always ask for a reduced amount, too. If you are eligible for $3,000 in student loans but you only need $2,000, you can write that into your acceptance form!

If you have more questions, check out this blog by Lynn O’Shaughnessy. She does a great job of explaining how to evaluate your financial aid letters!

*with an interest rate of 6.8% and a standard 10-year repayment plan

Please let us know of any questions or comments you have in the comment area below.