For introductory information on financial aid award letters, see De-Mystifying the Financial Aid Award Letter.
What To Do Once You’ve Received Your Letter
So you’ve received your financial aid award letters – now what?
Below are some ways to help you interpret different types of award letters and compare various financial aid packages so that you can choose the best financial aid package for you.
Differences in Award Letters
First, read through your letter and make sure you understand the contents. Since there is no standard format for award letters, each one you receive may look different.
Here are several ways in which financial aid award letters can differ from each other:
Different definitions of Cost of Attendance (COA)
COA is the total amount of money it will cost you to attend a particular school for one academic year. However, some schools may not factor big expenses such as room and board, books and supplies, or transportation into the cost. It’s important to know what is and isn’t included in the COA so that you can accurately compare the total cost of attending each school.
Different categories, acronyms, or wording
Letters may be worded or formatted in different ways. For example, one school may list a scholarship as “merit aid” while another may use the term “achievement scholarship,” or shorten “scholarship” to “sch.” It’s important to understand the different terms and categories so that you can accurately compare the types and amounts of aid offered by each school.
Some letters may also include additional information, such as the terms and conditions of each type of aid, or the percentage of students who receive aid from the school. This information can be helpful in understanding the overall financial aid package and the likelihood of receiving aid in future years.
Types of financial aid listed
Some letters may only list scholarships and grants, while others may also include work-study programs and loans. Some letters don’t provide clear information about whether the loan is subsidized or unsubsidized or even use the word “loan” at all. For example, an analysis from New America and uAspire, a national nonprofit supporting student aid accessibility, found that a number of award letters notated PLUS Loan as an “award,” which could potentially mislead recipients into believing they were receiving gifted aid rather than a loan to pay back.
It’s crucial for students to take the initiative and research the terms of loans (i.e. interest rates, fees, years-to-pay, etc.) on their own, as financial aid award letters may not provide all the necessary information. Research this information so that you can understand the true cost of taking out loans to pay for college.
Front-loading grants are a common practice among colleges and universities. This means that schools offer a higher amount of grants or scholarships during the first year or two of enrollment and then switch to offering loans for the remaining years.
The purpose of front-loading grants is to provide more financial support to students who may need it the most in the early years of their college education. This can help students avoid dropping out due to financial strains and encourage them to continue their studies.
Some schools may only offer grants for the first year, while others may offer grants for the first two years. Additionally, some schools may offer a combination of grants and loans for all four years, while others may switch to offering loans only for the remaining years.
When reviewing financial aid award letters, look for any indication of front-loading grants or changes in the types of aid offered from year to year to plan accordingly for the long-term financial commitment of attending a particular school.
Information on non-need-based aid
Non-need-based aid, such as the unsubsidized Stafford, the PLUS loan, and private student loans may or may not be included in a financial aid award letter. However, all students are eligible for these types of loans regardless of their financial need. Private student loans are also available to students, but they typically come with higher interest rates and less favorable repayment terms than federal loans.
Some schools may offer more generous loan terms or lower interest rates than others, so it’s important to compare offers from different institutions. Regardless, taking out loans, whether need-based or non-need-based, will result in additional debt that will need to be repaid after graduation. It’s important to carefully consider the long-term financial implications of taking out loans to pay for college.
List of recommended lenders
The list of recommended lenders for student loans may vary from school to school and can be included in the financial aid award letter. Some schools may have partnerships with specific lenders and prioritize those options on their recommended list. Other schools may provide a broader list of lenders for students to choose from. It’s important to review the terms and conditions of each lender, including interest rates and repayment options, before making a decision.
It’s also worth noting that students are not required to use one of the recommended lenders provided by their school. They are free to research and compare offers from different lenders on their own to find the best option for their financial situation. However, if a school provides a recommended list of lenders, it may be helpful to consider those options as they may have been vetted by the school and have prior experience working with students from that institution.
In summary, understanding the types of financial aid available, including front-loading grants and non-need-based aid, and comparing loan options from different lenders can help students make informed decisions about paying for college. It’s important to carefully consider the long-term financial implications of taking out loans and plan accordingly for the financial commitment of attending a particular school.
Comparing Financial Aid Packages
The Illinois Student Assistance Commission has a free comparison tool for you to organize yourself to compare the costs. After receiving a financial aid award letter, students should carefully review the options available to them and compare them with other lenders, if necessary. They should consider the long-term financial implications of taking on loans and plan accordingly for the financial commitment of attending a particular school.
Within a certain amount of time, students have the option to accept or decline each source of financial aid listed on the letter. It’s important to note that the list of recommended lenders may vary from school to school, but students are free to research and compare offers from different lenders on their own. Overall, students should take the time to understand their options and make informed decisions about paying for college.
When comparing financial aid offers, it’s important to look at:
- Net cost: cost of attendance – financial aid package = how much you will have to pay
- Out-of-pocket cost: cost of attendance – gifted aid = true cost of college
Gifted aid refers to financial aid that students receive that they don’t have to pay back, including scholarships, grants, and work-study programs. Out-of-pocket cost, on the other hand, takes into account any student loan debt that students will need to pay back after college.
Essentially, the out-of-pocket cost is the true cost of attending college, while gifted aid reduces the cost burden for students. When comparing financial aid packages, it’s important to look at both gifted aid and the out-of-pocket cost to understand the full financial picture.
Steps for comparing financial aid offers
1. Calculate the total cost of attendance at each school, including tuition and fees, room and board, books and supplies, transportation, and other expenses.
2. Subtract the total amount of gift aid (such as scholarships and grants) from the total cost of attendance to determine the net price of each school.
3. Consider the types and amounts of aid offered, including grants, scholarships, loans, and work-study. Pay attention to the terms and conditions of each type of aid, such as whether it needs to be repaid, whether it is renewable, and what the requirements are to maintain it.
4. Factor in your own financial situation and ability to pay for college. Consider how much you and your family can contribute towards the cost of attendance, as well as any outside scholarships or financial aid you may be receiving from other sources.
5. Compare the net price of each school and the types and amounts of aid offered to determine which school is the most affordable and offers the best financial aid package for your needs.
Do this for each school and then compare the results.
Keep in mind:
- Take out loans only as needed since loans can be more expensive in the long run and result in unnecessary debt
- Federal loans are generally less expensive and more flexible than private loans
- A bigger financial aid package made up mostly of loans may turn out to be more expensive in the long run than a smaller package of mostly grants or scholarships
- Be aware of how much will need to be paid back when comparing financial aid packages.
- Winning outside scholarships may affect financial aid packages offered
- If you reject part of the financial aid package (ex: loans), that won’t increase other parts of the package (ex: grants)
Financial aid is only one piece of the puzzle when it comes to your college decision, but it can be a big part, so take your time when looking through offers from schools.
Once you make your decision:
1. Formally accept the award offer from the school of your choice
Formally accepting the award offer from the school of your choice is important because it secures your spot and guarantees that the financial aid package will be applied to your tuition and fees.
2. Decline offers from other schools
It’s important to decline offers from other schools to allow other students who may need financial aid to have a chance at receiving the funds.
3. Complete any additional paperwork
Besides the FAFSA, completing any additional paperwork, such as loan applications, is crucial to ensure that all necessary steps are taken to secure the financial aid package and prevent any delays or issues with tuition payments.
Make sure you accept or decline offers by the deadline given!
If you find that the financial aid package you have received is not sufficient for your needs, you have the option to appeal the decision. The appeals process typically involves submitting additional documentation that was not included in your original application, such as a change in financial circumstances or extenuating circumstances that were not previously disclosed.
It is important to note that not all schools have an appeals process and those that do may have different requirements and deadlines, so it is important to research the specific guidelines for each school. Additionally, the appeal process does not guarantee additional financial aid, but it is worth exploring if you believe that your initial offer does not accurately reflect your ability to pay for college. You can find out more about the appeal process here.
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