We’re reaching that time of year when your senior should be hearing back about where he/she got in to college. But that’s not the only thing on which you should be getting news. Financial aid award letters are beginning to go out, and you want to be prepared. Schools will want to lure you to attend their find institutions, but I think it is important that you understand how to interpret a good award from a bad award. It may seem shocking, but these award letters aren’t straight forward. I recommend you follow these steps:
1.) Know your EFC
Make sure you are aware of your Expected Family Contribution (EFC) when comparing awards. Without this figure it is difficult to determine the good awards from the bad awards. Your EFC will be the same dollar amount for each school, but that doesn’t necessarily mean that’s all that you will have to pay out of pocket at each school.
For example, let’s suppose a family’s EFC is $10,000, and the school’s COA is $50,000. In a perfect world the student would get $40,000 in financial assistance to bridge this gap, but that doesn’t necessarily happen. Let’s say the student only received a $10,000 merit award and $20,000 in the form of a federal loan. The $10,000 in free money and $20,000 loan wouldn’t cover the family’s demonstrated need of $40,000. The family would then have to pay their $10,000 AND come up with an additional $10,000 (Private loan? Retirement withdrawal?). Without knowing your EFC, you won’t understand that this is a poor award.
If the school does not include your EFC on the award letter, contact them ASAP.
2.) Understand your out of pocket cost
Award letters should tell you the schools’ Cost off Attendance (COA). COA includes tuition, room/board, books, food, travel, and anything else you’ll have to pay for while at school. The school’s COA, minus any awarded grants and scholarships, will generate a net cost for you. When you are comparing award letters from different schools it is important they all are transcribed into the same language, so consider: COA – scholarships and grants = out of pocket cost.
3.) Know the Lingo
Some schools’ award letters don’t clearly articulate loans from grants and scholarships. For example, an award letter might have a line item titled “a Stafford” rather than “a Stafford Loan.” Schools strategically do this to make the school appear less expensive. If you don’t understand a line item, call the school.
4.) Ask questions
If the financial aid award remains confusing, call the school’s financial aid office and keep asking questions until you understand. You’re about to invest a lot of money in a college education, so you don’t want to act to hastily.
Now, if you’re still confused… call College Planning Experts at (661)295-9946. We’d love to serve you through this process.
