Financial Aid Award Letters—Decision Time

You have just received four financial aid award letters. Now what? This is the time to do a detailed analysis of each college's offer to help you pay for your education. Who is going to have you pay the least out of your pocket by giving you the most free money? Remember, accepting a financial aid award is a family matter. Why? Because if you are a dependent student, more often than not, your parents will have to borrow some money to send you to college.

First, financial aid offices refer to an aid award as a financial aid package. This means that a college will try to offer an aid applicant a combination of aid types, packaged in the form of grants and scholarships, loans, and a work-study job—that is, if your aid application met the financial aid deadline! If you missed the deadline date, you may only be awarded a loan or a job, which isn't a very good award. So be sure to apply on time.

The following are some critical points to consider when making a financial decision about where you will spend the next four, or maybe five, years:

• Each award letter should state the school's academic year cost of attendance (COA). Compare the letters side by side. Does the COA include all projected costs? Tuition, fees, room, board, books, transportation, and personal expenses are what normally make up the COA. Does your award letter itemize all these components? Or does it omit some? This is crucial because, for nine months, this is what you will have to budget for.
• What is your expected family contribution (EFC)? Is the school's—not just the federal government's—EFC listed on the award letter? Some schools may require a higher EFC than you expected. And be aware that the EFC may increase every year, regardless of your parents' income.
• Is there unmet need? Does your award letter clearly state that the school is unable to award you full need? Or does it explain that 100 percent of your need will be met? If that is the case, is most of the money in the form of a loan and a job? In other words, packages may contain enough money to cover your costs, but the money may not be free.
• If you are awarded a scholarship based on scholastic achievement or talent, is the scholarship renewable for four years? And is there a minimum grade point average you have to maintain? Can you switch majors but keep your scholarship?
• What will the college do to your award if you receive outside, noninstitutional, scholarships? Will the college reduce your institutional grants or scholarships? Or will they reduce your loan amount or job hours? (This is a good time to compare each school's policy on this matter.) Remember, aid cannot total more than the COA.
• If your package contains loans, what are the interest rates of the loans that are offered to you? Which school offered you more than one loan and why? Do not sign the award letter until you understand your loan obligations first.
• Ask the school if the financial aid package is likely to cover the same expenses every year. In particular, ask if grant or scholarship funds are normally reduced or increased after the freshman year, even if family income remains the same. Some colleges will increase the self-help (loan, job) percentage every year but not necessarily the free money.
• If you are awarded a job to help pay your costs, ask how many hours a week you will be expected to work to earn the amount awarded to you. You may want to request that your awarded job funds be changed to a loan, or, conversely, you may want your loans changed to a job. You must ask immediately because funds are limited.
• You can always appeal your award letter if you feel that your needs are not being met or if you have received a better award from a competitive school. Simply ask for a reconsideration of your award. (Do not use the word negotiate.)