High school seniors are receiving college financial aid offers, and the student and family may need some assistance deciphering the awards. Fortunately, the National College Attainment Network (NCAN) addresses ways you can help in their latest blog post.
With College Decision Day rapidly approaching, students might need help navigating financial aid offers. 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.
While financial aid offers foretell an exciting new next educational step, the offers have a reputation for being overwhelming and confusing. New America and uAspire analyzed over 500 financial aid award letters and found that many of the letters used convoluted jargon, omitted the complete cost of attendance, and left students confused about next steps.
With the right information, understanding and comparing financial aid offers from colleges and universities is a job that students and their families can realistically tackle.
Award letters all contain the same basic components, they typically include information about types of aid offered and an estimated cost of attendance. With that information, students can find the price they will actually pay, or the “net price.”
Broadly, there are four types of aid: scholarships, federal and state grants, work-study, and loans.
When talking to students about loans, stress to them to only take out as much as they need— it’s not necessarily best to take all that is offered. For example, if the student only needs $5,000 for food and housing, but $7,500 is offered, they should only take $5,000. Students may be tempted to have the extra money in college, but they should know that they will eventually have to pay back those loans with interest, which will be far more expensive in the long run.
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.