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How to Decode Confusing Financial Aid Packages

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What to do, step by step, when the award letters roll in

by Jean Chatzky

You paid the college application fees, sent off the transcripts and played the waiting game. Now, the financial aid letters are rolling in. Unfortunately, they’re often inconsistent and filled with jargon and numbers that make your head spin. We’ve got strategies for making sense of them and helping you pick the best one.

Lay them all out.

Sit down with your child at the kitchen table and spread the award letters out side by side. Ask yourselves, together, what is really affordable for you as a family. “[Remember] this isn’t a one-year proposition,” says Martha Savery, director of public affairs at the Massachusetts Educational Financing Authority (MEFA). It’s likely four, maybe more. Also, consider other upcoming obligations, like college for other children and retirement.

Compare apples to apples.

On each award letter you’ll see types of aid listed: scholarships, grants, subsidized loans, unsubsidized loans, PLUS loans for parents, etc. The goal is to compare like to like, particularly the total in money that doesn’t have to be paid back (scholarships and grants) versus that that does (everything else). One way to do this is to create an Excel spreadsheet. On the top, make columns for each type of aid listed out in the letters. On the side, list the schools. Once you’ve compared offers, compare each college’s actual cost to their offer. Oftentimes, financial aid award letters include the total cost of attendance, but if they only lay out the cost of tuition, go to the school’s website to figure out the total likely cost of attending, including room and board, books and supplies, transportation and personal expenses. Finally, deduct the “free money” — grants, scholarships, etc. — from each school’s cost, and see how much of each price tag is left unaccounted for. “That becomes the nut families have to think about how they’re going to finance,” says Savery.

Borrow wisely.

The loans on your offer letter are for a single year. Make sure your student understands what the total cost is likely to be and what type of loans you’re looking at. Subsidized loans don’t require interest to be paid while in school; unsubsidized ones do. Ask your student to think about what this amount in loans might mean post-graduation. What industry might he or she go into, and what kind of salary range does that entail? If your child ends up with $27,000 in loans, a standard 10-year repayment plan would mean about a $300 monthly payment, says Savery. A good rule of thumb: Students should aim to borrow no more than they expect to earn in the first year out of school.

Read the fine print.

Some merit-based financial aid has strings attached — for example, maintaining a certain GPA. Talk with your student about what happens if they don’t adhere to the guidelines and what the family’s fallback would be if the merit aid was lost. As far as work-study goes, know that it’s an offer — not a guarantee — of employment, says Savery. The student still has to find a campus job, apply for it, get accepted and work the hours to earn that money.

Stay in touch with the financial aid office about any changes.

“Most college counselors, parents and kids have no idea you can actually appeal your financial aid award letters,” says Kelly Peeler, founder and CEO of NextGenVest, a free service that will help you (over text message) synthesize and choose among your financial aid offers. Has something changed — a job loss, medical emergency or other financial incident — since you turned in your FAFSA? Let the schools know. Additionally, if there are wide discrepancies between offer letters — and your student really wants to attend one that isn’t offering as much as others — call the financial aid office. Let them know this is a top choice, and ask if there’s any way they could offer more financial aid. (It’ll likely be more effective if your student is also on the line or in the meeting — colleges would rather hear from potential students, says Peeler.) Another option is to go to open houses for accepted students or make an appointment to meet individually with a financial aid officer assigned to your child.

Check back in June.

The way financial aid works is that it’s divided up like a pie, with a certain amount of dollars available, says Peeler. Sometimes, based on enrollment numbers, colleges have more financial aid available than they anticipated. Around June, right before deposits are due, check in with your student’s chosen school. Have your child write an appeal letter and tell them he or she wants to attend but wanted to check in to see if they have any available financial aid to increase their package. Good luck!