Jill Haley: Financial aid award letters can be deceiving
During the next couple of months seniors in high school will be receiving their acceptances, and rejections, from colleges. They will also be getting their financial aid award letters which will detail the amount of money colleges will offer them to attend. Sounds pretty straightforward? Think again, because many award letters can be deceiving.
It is common for students and parents to look at the award letter and be impressed with the amount of money offered. I worked with a student who received a $20,000 University Grant from New York University. Pretty impressive, right? But when the student realized that the sticker price from NYU was close to $70,000, and that she would be expected to pay close to $50,000 to attend, the excitement wore off fast.
So, what should students be looking for in that award letter? First, they need to look at the total cost of attendance to attend the college for one year. This can vary greatly from $70,000 to $25,000 for a four-year college or university. The total cost of attendance (COA) includes tuition, room and board, books and miscellaneous fees. If attending far from home, travel costs should be incorporated into the cost. The COA will be posted on each college’s website.
After determining the cost of the college, look closely at the award letter. Financial Aid is divided into three categories: free money, work study and money you have to pay back (loans). Free money, or gift aid, is often federal and state money such as Cal Grants. This is the best kind of aid because, well, it’s free. Students must file the Free Application for Student Aid (FAFSA) to be eligible for this free money.
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It is also important to look for any loans that may be thrown into the mix when looking at award letters. Some colleges routinely package loans into their financial aid, and as we know this money is not free. Pay special attention to any loans that are offered as “financial aid.” It is important to know that if loans are offered, students and parents can decline them, and still be awarded the free aid.
Also work study might be thrown into the package. Work study is a job provided by the college to offset the cost of college. These jobs usually are on the college campus and work around a student’s class schedule. I always recommend that students take work study if offered.
Once a student knows the cost of attendance, they can subtract the amount of gift aid, and work study and get the net price that they will have to pay to attend the college for one year.
Colleges should provide, in writing, financial aid awards by the end of March. This will give students a month before they need to let a college know if they will be attending in the fall. Students and their families should carefully review award offers to avoid student debt that can follow them for decades.
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