NEWARK, Del.–(BUSINESS WIRE)–College-bound students who filled out the Free Application for Federal Student Aid (FAFSA) are faced with their next homework assignment: comparing financial aid award letters from colleges and universities.
When comparing these award letters, or the breakdown of a school’s personalized financial aid offer for an accepted student, students may notice a difference in formats and terminology. To help, Sallie Mae has tips for students and families on how to best review, compare, and evaluate financial aid offers.
- Compare the same information for each school. There is no standardized award letter format, so you may find a different set of items listed in each letter. Create a spreadsheet so you can compare and keep track of the same type of costs at each school. Look to track the amount of tuition; room and board; the Expected Family Contribution (EFC), an estimate the school uses to determine financial aid eligibility; and the financial aid offer itself, which typically consists of scholarships, grants, and federal student loans.
If you don’t see things like the Cost of Attendance, or COA, or the cost of books, supplies, and other related expenses, call the school’s financial aid office for help figuring that out.
- Understand the lingo. Schools might use different terms for the same thing – which can get confusing. For example, you might see federal loans listed as a “federal direct unsubsidized loan”, “federal loan”, a “direct loan”, “direct unsub”, or even just “L”. Take the time to understand exactly what is being offered.
Other types of aid, like work-study, may also lead to some confusion. In fact, according to Sallie Mae’s “How America Values College 2018”, more than four in 10 parents and students mistakenly believe work-study funds are automatically given to the student (42 percent). In reality, students must seek out a work-study job, and the aid comes in the form of pay for hours worked.
- Bigger isn’t always better. Not all award packages are created equally, and the biggest award may not be the best. Look beyond the total dollar amount of each award to see how much is “free money”, like scholarships and grants, and how much is money that needs to be paid back, like loans. It may make sense to accept a smaller award that offers more scholarships and grants, than a larger award that consists mainly of loans.
It’s not always about cost, either. Consider campus culture, location, social scene, and other quality-of-life considerations, before making your final choice.
- Each year might be different. Pay attention to conditions and contingencies, and note which parts of the award package, like scholarships and work-study, are renewable, and which are for one year only. Some scholarships require the student to maintain a certain grade point average to be renewed the following year. In addition, complete and submit required documents promptly; missing a deadline could affect eligibility.
- Shop around. Do your homework, and don’t be afraid to ask the financial aid office to consider a reevaluation of your package – especially if your family’s financial situation has changed since filling out the FAFSA.
“Examining a financial aid award letter, and ultimately choosing a college, might be the first time a student is involved in a large financial decision,” says Martha Holler, senior vice president, Sallie Mae. “Fortunately, with the right guidance, students can ensure they do so responsibly. Families should compare offers and negotiate, especially if financial situations have changed. Higher education, and the decisions that come with it, are well worth the research.”
Tips on understanding and evaluating award letters are available at SallieMae.com/AwardLetters and in Sallie Mae’s “How to Read Your Financial Aid Award Letter” video. Find additional information on saving, planning, and paying for college at SallieMae.com.
Sallie Mae (Nasdaq: SLM) is the nation’s saving, planning, and paying for college company. Whether college is a long way off or just around the corner, Sallie Mae offers products that promote responsible personal finance, including private education loans, free scholarship search tools, free college financial planning tools, and online retail banking. Learn more at SallieMae.com. Commonly known as Sallie Mae, SLM Corporation and its subsidiaries are not sponsored by or agencies of the United States of America.