Financial Matters: Comparing Financial Aid Packages

If you’ve applied for financial aid and filed all the paperwork by the appropriate deadline, an award letter outlining a college’s offer of financial assistance should arrive close on the heels of your notification of acceptance. Here’s a guide to understanding what that package really means.

The bottom line in comparing financial aid packages is the final cost of your education to you and your family. Since the total cost of education varies for each college, you’ll need to compare your packages in terms of several factors. First, compare the ratio of grants (gift money) to loans for each school. Packages with larger grants than loans are obviously more desirable. Next, consider how much you and your family are expected to contribute and compare this amount to your total grant award. Are you and your family comfortable with this Expected Family Contribution? Will you be able to provide the expected amount?

Now, compare loan types offered and their terms. The most desirable loans are federal direct student loans with low, deferred interest; these loans do not have to be repaid until after you have completed your education. Private, unsubsidized family or student loans generally require that repayment begins within sixty days of receipt of funds. Even when offered loans as part of your financial aid package, you are free to decline them.

Most financial aid packages also include work-study. Keep in mind that you are also free to decline this type of aid; although there may be significant benefits to work-study employment, some students prefer to find their own jobs outside of the work-study program on or near campus.

Call the college’s financial aid office to learn how outside scholarships may affect your financial aid package. While some colleges allow students to use these in place of loans, other colleges subtract this amount from any grant aid that you’ve been awarded. Ask, too, if you are likely to be awarded a similar package in succeeding years, assuming family finances remain at the same level. Some parts of your package may not be renewable, and this could affect your cost of attendance in subsequent years.

The final decision about college choice is a family decision, made by weighing numerous factors to determine the best choice for all of you. With skyrocketing college costs, finances may rightly count heavily in your final college selection.