Start the conversation about financial aid award letters
After the elation of acceptance letters, students and families can find themselves bewildered when financial aid award letters arrive. With no industry-standard format (or even the same terminology), comparing different offers can be a challenge. An easy way to help undergraduate and graduate students translate and compare their award packages, is to help them break down the information in each. Here are some tips:
- Begin with explaining the cost of attendance (COA)—emphasize that it includes the costs of one year of attending the school, including tuition, room and board, fees, even personal expenses and transportation. 1
- The Expected Family Contribution (EFC) can seem alarming if a family reads it as “what we have to pay for college.” Make it clear that EFC is an index number used to determine how much financial aid a student is eligible to receive. The EFC factors in a family's taxed and untaxed income, assets, and benefits (such as unemployment or Social Security). Family size and the number of family members who’ll attend college during the year are also 1
- Stress the difference between—and the importance of—“free” money (scholarships, grants, and fellowships) vs earned money (work-study) vs borrowed money (federal student loans). This is also an opportunity to let families know about the availability of credit-based PLUS and private parent
- To compare several financial aid award letters, suggest a spreadsheet with columns for every type of financial aid and a row for each school. By adding up the aid and subtracting that figure from the COA, students will have the balance (or “gap”) that they need to pay for school. That can start a conversation of other funding options, such as savings or private student
Two important decision points
Rather than focusing on a total dollar amount, students should consider whether the benefit of a smaller award that offers more scholarships and grants is a better option than a larger one consisting mostly of borrowed money. In addition, when deciding which school to attend, they should consider not just the financial awards, but other factors that will enhance the school experience, including location, culture, quality of academic programs, and graduation rate.
For more information—and a fun poster of financial aid award letter tips—visit SallieMae.com/Awardletters.