If you applied for financial aid using the FAFSA, CSS PROFILE or other financial aid application, you will receive a financial aid award letter from the colleges you listed. You should expect to receive your award well before Decision Day on May 1.
Unless you are one of the few lucky students receiving a full-ride scholarship, you can expect to receive a mix of one or more of the following: scholarships, grants, loans and work study to cover your college costs. The mix will be determined by your financial need and/or academic prowess.
Here are five tips to help you review those awards to determine which college is giving you the best deal:
1. FIND YOUR FULL COST OF ATTENDANCE
The first thing you want to find on the financial aid award is the full cost of attending the college — Cost of Attendance (COA). If this information is not available on your award, you should contact your Financial Aid Office.
Your COA 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
After you have figured out the COA, you should then determine the total value of all scholarships and grants (free money) you are being awarded. The more free money you get, the lower your out-of-pocket costs.
Keep in mind that most colleges require that you report any scholarships you receive from outside sources.
3. FIND OUT IF THE GRANT/SCHOLARSHIP IS RENEWABLE
There is no guarantee that the scholarship you receive as a freshman will be renewed. 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 meet certain academic and attendance criteria each semester? You may be required to have a minimum cumulative GPA and full-time attendance for renewal.
4. FIND OUT YOUR NET PRICE
To select the most affordable college on your list, you should find your net price (or net cost) for each college. This is the amount you will have to come up with to fund your college education by way of loans, college savings, working while you are in college or other means.
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 must decide how much you want to borrow over the four to six years you are going to be in college. 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
After comparing your financial aid awards, follow the steps outlined in your letter to accept or decline the award at the college you plan to attend. Your award will be itemized by category: scholarship, grant, loan and work-study. Once you decide on the right college, you must 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 debt free.
In some cases, 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 consider appealing your award.
THE BOTTOM LINE
In the final analysis, it is up to you to determine what is an affordable college. Don’t over-borrow just to attend your “dream school”, instead you may want to consider other options to ensure you do not graduate college with overwhelming student debt.