Financial Aid Offers: How to Read the Fine Print

by | May 25, 2019

Financial aid terminology is foreign – to say the least – to most parents and students. After all, how would a “regular person” understand the complex scenario of grants, scholarships and different types of loans that are specific to college tuition and expense? Even us, full time educational consultants, have to stay on our toes with the changes and nuances of the financial aid system.

Here are some tips that might help clarify a few of the most common mistakes.

  1. What you receive from the Financial Aid office at your college is not an “award”. Grants and scholarship are awards. Loans are not awards. Work-study is not an award; it is the potential for employment that offers earnings to students.
  2. In the financial aid offer, look for the cost of attendance. For any student and/or family to be able to make an informed decision, the amount of aid received must be compared to the total cost of attendance in order to determine the student/family financial contribution. Net cost is the difference between the total cost of attendance (COA) and all grant/scholarship aid received.
  3. Break down the cost of attendance into clear components. For students and families to be able to plan how to cover costs, the provided cost of attendance needs to be transparent about what is and is not included. While basic needs like food and shelter are critical, other keys costs such as books, supplies, medical insurance and transportation also need to be anticipated as you determine if a school is a financial fit.
  4. Student loans have different sources: federal, state, institutional, or private. Federal student loans come with important protections for students and families, often have lower long-term interest rates, and repayment starts six months after graduation. Read the title of the loan to know the source and to identify which loans come with these protections.
  5. Parent PLUS loans are not student loans. Parent PLUS loans are different than student loans and involve higher risk. Repayment starts immediately for parents who borrow PLUS loans, not after the student graduates from college, and PLUS loans include higher origination fees and interest rates. In addition, a parent must have no adverse credit history to qualify and further application is required to confirm eligibility.
  6. The financial aid process can be intimidating, often with deadlines and fees that are not intuitive. Make sure you take note of the specific next several steps that a student/family should follow to accept or decline financial aid.

When students and families understand financial aid offers, they make informed decisions that help to increase persistence, completion, and successful repayment of student loans. It is everybody’s best interest that you and your family understand the financial aid package you are offered. If you have questions about a specific financial aid package, don’t hesitate to reach out to the financial aid office at the college.

Questions? Let’s chat!

Bettina Weil
Weil College Advising, LLC

Weil College Advising

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