College admissions letters are rolling in for many students across the country, and financial aid offers will be right behind them.
March 24, 2022
These offers – often referred to as award letters – should spark conversations about college affordability between students, families, and the professionals who help them along their postsecondary pathways. Here are a few critical things that students and families need to know about financial aid offers.
For all of the excitement they bring, financial aid offers have a reputation for being a bit confusing. In 2018, the think tank New America and NCAN member uAspire analyzed over 500 financial aid award letters. Their research found that many of the letters used jargon, omitted the complete cost of attendance, and left students without clear next steps.
But with the right information, analyzing and comparing financial aid offers from colleges and universities is a process students and families can feasibly tackle.
Award letters’ basic components are the same. They generally include the details of the types of financial aid an institution is offering and an estimated cost of attendance. With that information, students can find the price they will actually have to pay, the “net price.”
Broadly, there are four types of aid: scholarships, federal and state grants, work-study, and loans.
The award letter should show the itemized offers for the fall, the spring, and their total for the academic year. Encourage students sure to ask themselves these questions when reviewing offers:
Once students have added up how much money a college is offering, they should compare that against the included cost of attendance estimate.
Total Cost of Attendance = Direct Costs + Indirect Costs
Once students know the financial aid offers and the costs of attendance, it’s time to find the net price if it was not included already. In New America and uAspire’s study on award letters, only 40% included a net price – the remaining out-of-pocket costs.
To calculate the net price, subtract the student’s financial aid total from cost of attendance. This is the amount that the student will actually be responsible for. A few ways to close these gaps include paying with savings or taking out additional loans.
Luckily, there are wonderful resources out there to help students and families crunch the numbers and weigh all of their options. Check out these three free tools:
If, at the end of their calculations, a student finds that their financial aid is still lacking, they might consider writing a financial aid appeal letter to ask the school to potentially grant more scholarships or loan and grant options. SwiftStudent is a great resource which helps students through this process.
When deciding where to enroll, the bottom dollar is not the only thing to consider. Encourage students to research potential schools’ graduation and retention rates, along with how their net price stacks up against other students’. The Department of Education’s College Scorecard is a wonderful resource to make those comparisons.
If students and families feel that they’ve hit a wall, encourage them to reach out to a college’s office of financial aid to get answers.
Running the numbers, doing the research, and comparing schools is not the most exciting work, but it is well worth the excitement that accompanies the final product: making a decision about the future that students and their families can feel good about.