Finding out that you’ve been admitted to your dream school is exciting and a great reason to celebrate. However, after you’ve done your happy dance, I would encourage you to review your financial aid award and compare awards from different colleges.
If you’re lucky, your financial aid award will be all gift aid – scholarships and grants. But given the reality of financial aid, you will more than likely end up with a mix of scholarships, grants, loans. This mix is dependent on your family’s financial circumstances. Although if you qualify for merit aid, your financial need is not a factor.
Keep in mind, only a very small percentage of students receive a full-ride scholarship.
Since the financial aid award letters often look different from one college to another, you will want to review it with care. This step is crucial to ensure you are comparing apples to apples. Here are five tips to review your financial aid award.
1. Find Your Full Cost of Attendance
First, you want to find out the full cost of attending the college. If this information is not available on your award, you should contact your Financial Aid Office.
The cost of attendance includes tuition and fees, room and board, books and supplies, travel and personal expenses for one school year.
2. Find Out How Much is Free Money
Second, you need to determine the total value of all scholarships and grants (free money) you are being awarded. The more grants and scholarships you’re awarded, the lower your out-of-pocket costs.
Keep in mind, most colleges will expect you to report any outside scholarships. This could affect your overall award. Each school's financial aid policy is different when it comes to outside or private scholarships..
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3. Find Out if Your Scholarship is Renewable
Third, find out if your scholarship is renewable after freshman year.
Sadly, some colleges will entice you with a generous one-time scholarship but then leave you hanging for subsequent years. Find out if the scholarship is renewable and what the renewal requirements are.
For instance, do you have to earn a certain GPA or remain in full-time status? Many colleges require a minimum cumulative GPA even for scholarships awarded on the basis of financial need.
4. Figure Out Your Net Price
Fourth, to find the most affordable college on your list, find your net price (or net cost) for each college. Your net price is the amount you will pay after scholarships and grants are factored in.
To find your net price, deduct the scholarships and grants in your award from your Cost of Attendance. This amount will quickly make it apparent if you can afford the college or whether you need to look elsewhere. This is ultimately a personal decision, but one that should not be taken lightly.
If you are going to take out student loans to fund part of your education, you should decide how much you want to borrow. The Consumer Financial Protection Bureau (CFPB) recommends that you "try not to accumulate more total student debt than you expect to earn as a starting annual salary when you leave school".
5. Accept or Decline Awards
Finally, you will have to accept or decline the award. You can also decline parts of the award if, for example, you do not want to take out all the loans that is offered to you.
Your award will be itemized by category: scholarship, grant, loans and work-study. Once you decide on the right college for you, you will be expected to accept some, all, or none of the financial aid offered.
Whatever you do, don’t feel obligated to accept every (or any) loan a college offers, especially if your goal is to graduate college with little or no debt.
Additionally, you might be able to appeal your financial aid award. If your family's financial circumstances (for e.g., job loss) have changed since you submitted the FAFSA, you should appeal your award. In most cases, the financial aid office will request supporting documents to support this change. The financial aid office will let you know what documents will satisfy this requirement.
As you celebrate getting into your dream school, don’t forget to pay careful attention to the breakdown of the financial aid award.
Remember, carefully reviewing your financial aid packages will ensure that you know your out-of-pocket costs before committing to any one college. Whatever you do, don’t over-borrow just to attend your "dream school". Instead, consider other more affordable options to keep your debt manageable.
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