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6 Ways You Can Compare Financial Aid Offers for College

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It’s not always easy to figure out a college’s true cost. Each school sends its own financial aid award letter, and these offers might look very different from school to school.

To compare financial aid offers objectively and find the best college or university for you, take these six steps:

1. Review the types of financial aid offered

Most colleges send out admission offers in late March or early April of your senior year of high school, assuming you applied during the prior fall. Typically, you’ll receive financial aid award letters around the same time, and they’ll outline different types of aid.

Based on the results of your Free Application for Federal Student Aid (FAFSA), your award letter could comprise:

  • Institutional or state grants
  • College-sourced scholarships
  • Work-study programs
  • Student loans lent by the federal or state government or your school

Federal student loans, which are from the U.S. government, and institutional student loans, which are offered directly by a college, are more complex to figure out. Each has different interest rates, fee structures and repayment terms and options.

Your financial aid award will include offers for federal or institutional student loans, but not from private student loan companies. The letter might indicate how much you can borrow from a private lender, but it won’t give you a specific offer. If there’s a gap between your financial aid award and your estimated cost of attendance, you could apply for private student loans separately.

Note that some aid is based on financial need. The Pell Grant, for instance, goes to students with significant financial need, as determined by the FAFSA. Work-study opportunities, which allow students to make a certain amount of part-time income each semester, also go to those with financial need.

The aid provided through grants and work-study programs doesn’t have to be paid back. Another example of gift aid, or financial aid that doesn’t have to be paid back, includes need-based, merit-based, or interest-based institutional or private scholarships.

So when you compare financial aid offers, examine the types of aid listed in each offer carefully. If one package offers more in gift aid than in federal and institutional student loans, it could be the more affordable choice.

2. Look for the amount of renewable aid

Most financial aid letters reveal the cost of attendance only for your upcoming year of school. But you might have three more years of college beyond it, so it’s important to estimate the total cost of your degree.

With each school you’re considering, determine which offers of grants, loans, and work-study money are renewable, and those that are offered only for one year.

You also should keep an eye out for renewal requirements. To stay eligible for federal financial aid, for example, you’ll need to make “satisfactory academic progress” while in school.

This usually means maintaining a 2.0 GPA and completing your credits on time, although schools establish unique standards. Scholarships often have their own criteria, too.

Not being aware of these requirements could mean losing your scholarship, for example.

Expert tip: Look out for financial aid “front-loading”
Some schools offer a lot of aid at the beginning to attract students, and then less in the following years. That could leave you scrambling to cover costs in your sophomore year and later.

3. Estimate your own cost of living

Some financial aid award letters will include an estimated cost of living, including expenses such as housing, books and food. But your actual expenses might be different from the numbers from the financial aid office.

For instance, you could lower your housing expenses by living off-campus or commuting from your parents’ house. Other ways include buying used textbooks online or cooking at home instead of buying a pricey meal plan at school.

Instead of accepting the school’s cost of living figures at face value, take the time to add up your own expenses based on your lifestyle.

You also might find that location plays a big factor. Going to a school in the middle of New York City likely will cost you more than studying at a rural or suburban campus elsewhere.

At New York University, for instance, the financial aid office estimates the cost of room and board to be $19,244 for the 2020-2021 academic year. At the University of Wisconsin-Madison, the estimated cost for room and board is $12,220.

Where you choose to attend college could mean a difference of thousands of dollars in living expenses.

4. Decide which parts of aid you want

You don’t have to accept your full financial aid offer to attend a school. Instead, you can pick and choose the parts you want or don’t want.

It’s a no-brainer to accept all the grants and scholarships you’re offered, but you might rethink a work-study program if it won’t allow you to concentrate on your studies.

Also, you might take out fewer federal student loans to minimize the amount of debt you’ll have upon graduation. You also could use savings or income from a part-time job to cover college costs.

If you need to borrow federal or private student loans, make sure you understand the terms and conditions before borrowing. For example, about half of in-school borrowers don’t know the interest for their loans, according to our 2019 survey on student loan misconceptions.

Take the time to learn how student loans work before borrowing.

5. Calculate your true cost of attendance

Once you’ve estimated your living costs and determined which aid offer to accept, you might be focused on each school’s net cost of attendance (the total cost minus the aid you’ll receive).

Net cost of attendance is just one piece of the puzzle, however, and could possibly mislead you. For example, consider two fictional colleges that show the same net cost of attendance, at $5,000 per year.

SchoolAnnual cost of attendanceGift aidLoansNet cost of attendance
State University$20,000$10,000$5,000$5,000
Ivy College$60,000$30,000$25,000$5,000

When you break down the offers, you’ll realize that you’d need to take out $20,000 more in loans to attend Ivy College instead of State University. Our student loan calculator will show you that borrowing $25,000 at a 5.00% interest rate to attend Ivy would require monthly payments of $265 for 10 years to pay off the debt.

If you multiply that figure by four years of college, you might graduate from Ivy with $100,000 in total student loans in contrast to $20,000 from State. So even though your net cost looks similar at first glance, the total costs at the two colleges might vary hugely.

By prioritizing schools that offer a far greater percentage of gift aid than student loan borrowing, you’ll save money in repayment once you graduate.

6. Remember you can ask for more aid

If your heart is set on a college whose financial aid offer falls short of the costs, you could try negotiating your financial aid package via a professional judgment appeals process.

Contact the financial aid office to discuss your situation, and find out if it can help ease your financial burden.

If there’s a big change in your financial situation — for example, a parent lost a job or had another child — you also can update your FAFSA.

Although receiving more aid isn’t a guaranteed outcome, it can’t hurt to ask if you feel your financial situation qualifies you for additional grants, scholarships or student loans.

Compare financial aid offers until you’ve found your best package

Crunching the numbers in your tuition bills probably isn’t as exciting as shopping for your new dorm room. But it’s an important step in choosing a college, and you’ll be happy you did it when you graduate and realize you don’t face huge student loan bills.

Take the time now to compare financial aid offers, and make sure to contact the financial aid office if anything is unclear. By evaluating your financial aid options, you’ll be able to choose a college that helps you reach your goals and works for your family’s budget.


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