Colleges may offer aid applicants a combination of aid types, including grants, scholarships, and federal loans. The offer of financial aid will come in the form of an award letter.
The financial aid offered in award letters may be different for each school to which you apply. Don't automatically assume that a less expensive school will cost you less money.
Look very carefully at your award letters:
Question 1: What percentage of the award is "free" money?
- Identify the school that requires you to pay the least out of your pocket by giving you the most money in the form of grants and scholarships, which you don't have to pay back as long as you meet all of the obligations. Obviously, the more "free" money the better.
Question 2: Are there any gaps in my college funding?
- For each school, subtract the amount of grants, scholarships, and other aid you are offered from the total cost of attendance.
- Look at the amount of money that remains, which is the amount you are responsible to cover (the "gap").
Question 3: What should I do about those gaps?
- Look into getting a federal loan. (If you qualify, a subsidized federal loan is a better option than an unsubsidized federal loan.)
- Ask your parents if they are willing to consider a PLUS loan. (A PLUS loan is a federal loan that your parents would take out in their name.)
- Consider getting an alternative (private) loan ONLY after you have exhausted all other sources of funding.
- Do not agree to any award letter until you first understand your obligations.
- Find out how each school handles outside aid (that is, funds not granted by the college or the government). Colleges vary on this and should explain their policies to you.
- Your total aid package (both need-based and merit-based aid) cannot exceed the cost of attendance, and it's actually against the law to knowingly overfund a student.
Test Your Knowledge
Which school will be more expensive for you if your expected family contribution is $5,000? One that costs:
- $8,000 per year
- $24,000 per year
There is no difference you will be asked to contribute $5,000 at both schools. Although the second school may seem more expensive, you will be eligible for more aid, since the cost of attendance is greater.