Understanding the Financial Aid Offer

Understanding the Financial Aid Offer

Your hard work is paying off! You’ve been accepted by several of your top colleges, and you have a stack of acceptance letters just waiting for you to pick the school of your dreams. Around the same time your acceptance letters arrived, you probably received a financial aid offer from each school. These letters may seem confusing right now, but we will help you understand the different types of financial aid, so you can make an educated decision about which school makes the most financial sense for you.

What is the Financial Aid Offer?

The financial aid offer is a list of the financial aid being offered to you from each school. If you submitted a Free Application for Federal Student Aid (FAFSA) and were approved for aid, you will receive offer letters from each school that accepted you.

If you haven’t submitted your FAFSA yet, don’t panic. It’s not too late to complete your FAFSA. For those of you heading off to college in the fall, just get it done as soon as possible. And remember, the FAFSA opens on October 1st each year, so be sure to do it early in the future. You also need to apply every year while you’re in school to qualify for financial aid.

Types of financial aid:

  • Grants – do not have to be repaid.
  • Scholarships – do not have to be repaid but may require you to keep a certain grade point average.
  • Loans – used to pay current expenses and are repaid later, usually with interest.
  • Federal work-study – provides part-time jobs to pay for college expenses.

Financial aid can significantly offset the costs of college for many students and families. While each of your schools will send a financial aid package, the offers won’t look the same, or contain all the same information.

Important information to look for:

  • Financial Aid – This is the amount of grants, scholarships, loans, and work-study each school is offering to help meet your financial needs.
  • Cost of Attendance – The total cost of attending for one year. The amount includes tuition, fees, room, meals, books, personal expenses, and transportation.
  • Expected Family Contribution – The Expected Family Contribution (or EFC) is a measure of a family’s financial strength and is calculated according to a formula established by law. Schools use the EFC to determine your federal student aid eligibility and financial aid award.
  • —- Please note that your EFC is not the amount of money your family will have to pay for college nor is it the amount of federal student aid you will receive. It is a number used by your school to calculate the amount of federal student aid you are eligible to receive.

If you don’t understand something in your offer, call your school’s financial aid office. Counselors are available to help you understand the financial commitment you’re about to make. After you know what each school is offering you, it’s time to start comparing financial aid packages.

How to Compare Financial Aid Offers from Different Colleges

As we’ve mentioned, financial aid offers can look very different from school to school. Try making a simple chart like the one below to compare financial aid offers line-by-line. This can give you a better picture of the financial aid being offered by each school.

Let’s do the math:

While colleges usually try to meet your full financial need, sometimes they can’t. Looking at the graph above, the financial aid package from College A was able to meet your financial need. However, the financial award from College B left you with $2,400 of remaining financial need.

If College B is your first choice, you can bridge that gap by applying for a federal parent loan or an alternative loan like the NC Assist Loan, your state non-profit lender.

Don’t forget to apply for as many scholarships as possible. You can see from the numbers above that one or two scholarships worth $500 each could make a big difference in the amount of money you may decide to borrow.

Decision Time

Now that you have a better idea of how to read and compare financial offer letters, you can plug in your own numbers to get a better picture of which school is financially right for you. CFNC.org is a great free tool to help you plan and pay for college.

There are many important factors that go into choosing a school. While cost may be the biggest decider for most families, it’s not the only factor. It’s time to sit down as a family, consider all the options, and choose the college that is right for you. Good luck!