The trick to comparing your kids’ financial aid award letters is going beyond just the dollar amounts and looking at the types of financial aid. Depending on the types of financial aid you’re getting, the school offering your kids the most money in financial aid may not be making the most generous offer.
Take a closer look at the money: How much of that financial aid package is grant or scholarship money that’s actually just being given to you, and how much of it is parent or students loans that you and your children are going to have to pay back … with interest? Is there a work-study award that would require your kids to work part-time while they’re in school?
As you and your college-bound senior sort through your financial aid offers, here are four tips to help you find the award package that works best for you.
1. Set time aside.
You and your son or daughter may be tempted to accept the first attractive financial aid offer you get. Resist the urge to jump the gun. Instead, make time to sit down together and discuss each award letter in detail:
Would your kids be required to get a part-time work-study job? Do they think they’ll be able to juggle a part-time job with the demands of a college schedule? How much student loan debt is involved over four years? How strapped for cash are they willing to be?
Talk honestly, and exchange ideas. Consider this time a quality investment in your children’s future and a perfect opportunity to cement your relationship before they go off to college.
2. Consider the costs.
Bear in mind that the cost of college goes beyond just tuition and room and board. You’ll want to make sure you budget for other necessary expenses like your kids’ books, lab fees, travel costs, and day-to-day living expenses.
Use the school’s cost of attendance as a guide. Most schools will break down their COA on the financial aid award letter. Besides tuition, fees, and room and board, the COA includes an estimate of typical annual student expenses like textbooks, transportation, and personal expenses.
Discuss with your kids whether you think these estimates are realistic. If not, come up with your own COA budget that reflects what you really think college will be costing you each year.
3. Know what you’re expected to contribute.
Your financial aid offers should also show your
expected family contribution (EFC), the amount you and your kids are expected to contribute toward their college expenses that year.
Make sure you and your kids understand just what that EFC and each financial aid package entail, both in the short- and long-term. Do you have the cash up front, or will you need to take out additional parent loans or private student loans to cover your EFC? How in debt are you willing to be? How long do you want to be paying off parent and student loans?
4. Do the math.
This online
Award Analyzer can help you cut through the noise to compare up to five financial aid offers at a time, side-by-side. The analyzer gives you a standardized comparison by showing you how the money in each award is weighted: What percentage of the award is grants and scholarships, what percentage is work-study, and what percentage is student loans?
Just enter the requested dollar amounts from your award letter into the analyzer, hit “calculate,” and you’ll be able to see how your financial aid packages measure up against each other.
Related Articles: Making Sense of Your Financial Aid Award Offers, Comparing Your Financial Aid Awards, Your Financial Aid Options Decoded