As the cost of college continues to rise (tuition at George Washington is closing in on $40,000), the financial award letter can often be just as important as the college acceptance letter in determining where you plan on going to college. Understanding the financial aid award letter will help you and your parents make a well-informed decision about your college future.
We like to refer to the tuition rates you see published on a school's website or in college guidebooks as the "sticker price." As with cars, most people don't end up paying the "sticker price." Colleges offer "discounts" off the "sticker price" in the form of scholarships, grants, work-study, and loans. The financial aid award letter lays out these "discounts". It's not just the size of the "discounts", but the make-up of these "discounts" that's important.
First off, take a look at the make-up of the cost of attendance. Some colleges will break out the expenses into categories like tuition, room and board, travel, and personal expenses. Colleges may differ on what they include in the cost of attendance. You want to be confident you are comparing apples to apples throughout this process. Make sure you are clear on what has been factored into the cost of attendance and, more importantly, what has not been incorporated into the cost of attendance.
Secondly, you want to locate what the school is expecting you and your parents to contribute out of pocket based on the financial aid office's assessment of your and your parents' financial situations. Some schools will provide a single "Expected Family Contribution" while others may break this amount into a Student's Contribution and Parents' Contribution. This is the school basically saying "We looked at your finances, and we think you and your parents can afford to pay $___ toward college."
Now, we get to the real guts of the financial aid award letter where the school lays out what types of aid they are offering and how much of each type. This is where you really want to take a good hard look and make sure you understand what's going on. The mix of the financial aid is as important (if not more important) than the amount. Free money (that means scholarships and grants) is the best type of financial aid. Federal loans such as Perkins Loans and Subsidized Stafford Loans are better than private loans, but they still need to be repaid. It's also important to remember that you don't just get federal work-study money. You're going to have to get a job on campus and actually earn that money. The federal work-study amount on your letter is the maximum amount you can receive, not a guaranteed amount. So to recap, here are the financial aid types from best to worst:
Okay, so now you understand how much financial aid the school is offering and what types of aid are included in your package. The next step is determining if there is any unmet need. You can determine the unmet need by taking the cost of attendance and subtracting the expected family contribution (what the school said you can afford to pay) and the financial aid package (what the school has offered you to meet your financial need).
In mathematical terms:
COA - (EFC + Financial Aid) = Unmet Need.
Typically the lower the unmet need, the better. However, as we said before, a school may be offering less aid and leaving you with more unmet need, but may actually still be a better deal if their financial aid package contains mostly "free money" and fewer loans.
The package you receive your sophomore year may look different than the one you receive for freshman year. Find out whether scholarships are renewable or one-time awards. See if there are certain requirements for keeping scholarships (e.g., maintaining a 3.0 GPA).
If have done a great job searching for scholarships and have won a few awards, make sure you understand how these scholarships will impact your package. Some colleges will reduce the loan component to offset these outside scholarships, while others will unfortunately reduce the scholarship / grant component of your financial aid package. Colleges will usually spell out this information in their Outside Scholarship Policy.
So now you know what to look out for when comparing financial aid packages, and all you need is a tool to help you compare them. Well, you are in luck. We've developed a Financial Aid Award Evaluator so you can view side-by-side comparisons of your financial aid award letters for up to 4 colleges.
We also offer a tool to help you compare student loans. Our Student Loan Marketplace enables you to dig into the guts of a student loan and really understand how all the parts of a loan (interest rate, up-front fees, borrower benefits) come together to impact how much you actually have to pay.
|Olive Grey||April 20, 2017 at 10:55 AM|
Today there are many talks about students loosing financial aid but as an expert with http://researchpaperwritings.net/buy-research-papers/ I'd state students are not at risk of losing financial aid. The IRS DRT Tool is not required to complete the FAFSA. Can it be convenient for some? Yes, but it is not required. You can still complete your FAFSA the way everyone did before DRT was available, enter the numbers from your tax return. DRT is not even required for verification. It can make it more convenient for some. Not everyone is selected for verification. Yes the feds encourage the use of it because they are working to insure data is accurate but it is not required. If you are not selected for verification and NEVER use IRS DRT you won't lose your financial aid. IF selected for verification tax transcripts can be requested online at irs.gov or by using the 4506-T form. Ask your financial aid office they can assist you. We should not frighten students and their parents away from applying for funds needed to further their education. Our approach in our office is to identify those still needing a transcript to complete verification, remember this was available starting October 2016, and we will work with them to complete verification so financial aid can disburse. I promise, just because the IRS DRT Tool is down you can still apply for student financial aid.
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For many of you, taking out student loans is a necessary part of going to college. You're probably already receiving letters and e-mails from student lenders, highlighting the "benefits" of their student loan program. It's no easy task sorting through all your options.
Navigating your way through the maze of private student loan options can be difficult, even if you're a math genius. One lender is offering you money back when you graduate. Another lender lowers your interest rate if you set up bill payment by auto-debiting your bank account. How do you decide which student loan is best for you?
It just so happens that CollegeToolkit.com now has a tool to help you make apples-to-apples comparisons of Stafford, PLUS, and Private loans. It can be difficult to compare loans that may have different interest rates, origination fees, and borrower benefits. Student loans have lots of moving parts and figuring out which option is better for you can be a dizzying task.
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Our Loan Cost Index gives you a quick sense of how costly a loan is (in today's dollars). Think of it as kind of like a price tag for a student loan, the lower the number the better. We want to help you become a bargain hunter when it comes to student loans.
Let's walk you through a quick example. You select a student loan with a Loan Cost Index of 125. That means that for every $100 in student loans that you take out, you will be repaying $125 (in today's dollars). Our Loan Cost Index takes into account the interest rate of the loan, any borrower benefits for the student loan, and any upfront fees as well as other factors like in-school and grace periods.
The Loan Marketplace also lets you customize the results. If you want to exclude all borrower benefits, you can. If you plan on making interest payments for your private loan while in school, that's possible, too.
The Loan Marketplace is intended to help you make good decisions when it comes to picking the best student loan for you and your parents.
One thing we hope you keep in mind before you start your search for private loans, make sure you take advantage of more affordable funding options first. That includes, searching for scholarships and taking advantage of federal loan programs like Stafford loans. Once you've done that, you're ready to turn your attention to private loans.
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