Making Sense of College Costs and Financial Aid

(StatePoint) That moment when your child receives an acceptance letter to a coveted college is a time to feel pride in their achievements and excited about their future. It’s also a time to make sense of the school’s price tag. That’s where financial award letters come into play.

“You’ll receive an award letter from each school your student was accepted to listing all the details of the financial aid package,” says Angela Colatriano, College Ave Student Loans. “This information helps you figure out what’s covered and how much your family is expected to pay.”

Unfortunately, if you’re like many parents, you may not be prepared for everything you read in these award letters. In a recent College Ave Student Loans survey, only 30% of parents who received award letters said they received as much aid as they expected, and 74% said they found the expected family contribution surprisingly high. Colatriano also notes that because the layout of these letters varies from school to school, it can be hard to compare their terms.

To help you decipher your financial aid award letters and figure out how to pay for college this fall, consider these tips and insights:

1. Sort grants and scholarships from other aid: If your child was awarded a federal grant or scholarships from the college, they will be listed on your award letter. These do not need to be repaid and are applied directly to the school’s tuition. You can also pursue outside scholarships. 

2. Delve into federal aid: The award letters will show you if your student qualified for the Federal Work-Study program. Likewise, schools will list any federal student loans you’re eligible to receive. Don’t forget to complete the Free Application for Federal Student Aid (FAFSA) each year to qualify.

3. Meet the gap: If after accounting for grants, scholarships and federal aid there is still a gap between school costs and what you can afford, consider how you can reduce costs or get more funding. For example, you may reconsider your choice of school or have your student take on a part-time job. You might also want to shop around for a private student loan. If you do so, make sure you borrow only what you need. Also, look for a lender offering favorable terms, repayment options and interest rates. 

4. Look before you leap: Remember that most types of financial aid come with terms and conditions. For example, a scholarship may require a student to maintain a certain GPA for it to be renewed the following semester. Federal and private loans will have interest rates and repayment terms. Before accepting or pursuing any type of financial aid, be sure you understand what’s involved.

5. Get assistance: When in doubt, don’t be afraid to reach out to your school’s financial aid office for assistance. They are a great resource to help you and your family navigate the financial aid process.

“With so many competing financial pressures, it’s more important than ever for college-bound families to understand the ins and outs of their financial aid offers and what they’re responsible to cover each year,” Colatriano said.