Now that college acceptance letters are out, the hard part of the college decision process begins — choosing the college with the right financial aid package.
Any first-time student can tell you how discouraging this is. You have to decipher some complicated Aid Award letter language and actually do the math to figure out which aid package is better.
Between understanding loans disguised as “financial aid” and knowing what gift aid is, your award package is what will keep you financially secure in the future. Or it won’t. It all depends on what you choose.
How To Start Comparing School Aid Offers
First, it’s critical to understand the different types of aid in an award letter. Here are the most common:
Grants – Funds offered by the government or institutions that do not have to be paid back (gift aid).
Loans – Offered by the government or private lenders that have to pay back over a set period with interest. Government loans come in both subsidized and unsubsidized.
Work-Study – The option for a student to work for the school for additional income that goes directly towards their tuition or expenses.
Scholarships – Awards given from organizations, schools, and institutions to help a student cover college costs (gift aid). You do not pay them back.
Read Your Aid Award Letters
Now that you know the main options for aid, you’ll want to read your aid award letter and pay careful attention to the amount of gift aid.
If you’re confused about your aid award letter, we have a step-by-step guide to help you read through it here.
Understand Your Net Price
When you know what gift aid you’re being given, you can subtract that from your Cost of Attendance (CoA). You can read our guide for understanding how to do this here.
Basically, subtracting your gift aid from your CoA will help you to determine the Net Price. That’s your out of pocket expenses and the first step to understanding which colleges are more expensive than others.
As you can see, award letters are confusing and don’t make the decision easy. Take your time reading through them and reach the conclusion that works best for your financial and educational goals.