Many families with high school seniors have started and will begin to compare financial aid packages. Unfortunately, the early returns for aid now are not looking as generous as in past years.
Some believe that colleges are nervous about major changes regarding federal aid and the way it is distributed. Colleges may be concerned that in future years, they may have to dig into their endowments.
When financial aid letters do arrive, the different kinds of aid that make up the package can be confusing. There will be many questions, such as "What has to be repaid? What are the interest rates and terms for loans? Which items are renewable? What is the true cost with all the fees and living expenses?" And before families make their final decision, there are some critical things they need to know:
What is the TOTAL Cost?
Families need to look closely at the total cost of each college (tuition, room, board, fees, books, travel). They then need to subtract the amount of financial aid awarded to determine what the out of pocket expenses will be. Most schools will not include fees and living expenses on their award letters, thus the overall cost looks lower than it is.
What Has to be Repaid?
Families should not only worry about the total amount of their award. They need to know how much debt a student will graduate with; this should be a key factor in their assessment. So what steps should be taken?
First separate out money which does not have to be paid back, like grants, scholarships, merit awards and tuition reductions. Then make sure to check the terms of each portion of the package to determine which are renewable for future years. Next, look at the work study and loans. Side note: work study is paid to you throughout the year. Compare the amount of aid that does not have to be repaid across all your colleges. Then, look at the loans as a separate amount.
Appealing the Offer
What? Appeal? Most families don’t realize it, but you can appeal your financial aid offer. Colleges usually reserve 10-15% of their financial aid pool for appeals. Work with our consultants, and wecan guide you on how to appeal and ask for more money. Note: Colleges will offer more money in an appeal, but it will rarely be the full amount requested.
Filling the Gaps
For many students, even after an appeal, there will be a gap between what they can afford and what they receive in aid. In some cases, it can mean looking at outside loans. Ask the financial aid office at your desired college for their recommendations. They may have approved lenders with good interest rates on loans. Private scholarships are another option, but be sure to check the terms of your financial aid package before accepting outside scholarship money. You are required to report all scholarship sources to your college. Also, keep in mind that private scholarships are usually just for one year vs. college-based aid which will often be renewed. Lee Academia Consultants can guide you in scholarship searches and applications.