Getting accepted into college is so exciting. You feel like the sky’s the limit! However, what comes next—your financial aid offer—might bring you right back down to earth. Here are some tips to help you understand what it all means.
It starts with FAFSA. A college’s financial aid offer is based on the information you submitted through your Free Application for Federal Student Aid (FAFSA) and other funds available to you through the college. It will outline a combined package that will include:
scholarships and grants from the college
Sometimes a letter will list grants and loans together. Keep in mind that a loan will need to be repaid, but a grant doesn’t. If your letter lists an item with the label “L” or “LN”, it’s a loan, not a grant.
Your financial aid offer will also show an expected family contribution, known as an “EFC.” This isn’t how much your family will pay. It’s a number your school uses to calculate how much aid you’re eligible to receive.
Know the real cost of attendance. Some letters only show tuition, fees and room and board (assuming the student lives in a dorm). You should factor in other necessary costs, too, like off-campus housing if you won’t be in a dorm, computer, textbooks and supplies, transportation, health insurance, and miscellaneous expenses like hygiene products or haircuts. The college’s website may have more information on some of these other costs if your letter doesn’t include them.
Focus on the net price. It’s important to know that net cost is not the same as net price. Net cost can include items like loans you’ll need to pay back and student employment, where you’ll be working off part of your costs.
The net price of a financial aid package is the total cost of attendance minus gift aid (money that you won’t need to pay back or work off). Not every college calculates net price in the same way. Look carefully to see what your offer includes.
Look at loan types. Your offer may include a number of different loan types. Federally subsidized loans don’t accrue (accumulate) interest while you’re a full-time student, and unsubsidized loans do. So, if you’re comparing 2 offers, check to see if interest will accrue and how much.
The offer also may include a PLUS loan, which is a federal loan available to qualified parents. If accepted, payments on this loan begin immediately. (The interest rate and loan fees are generally higher on PLUS loans than they are for other student loans.)
Choose what works for you. You don’t have to accept an offer “as is” or borrow the full amount offered. In fact, it’s sensible to borrow only what you’ll need. For example, you may decide you’d prefer to take out a private student loan instead of or in addition to a work-study program. And, you can appeal the award. If another school sent you a better offer, you might be able to use that in an appeal to a financial aid office. You may also have special circumstances that weren’t covered in your letter that would qualify you for more aid, such as a job loss, the death of a parent or spouse, or a large medical expense.
Check for servicemember or military family benefits. Some scholarships and grants are specifically designed to help military families receive college aid. If you’re a veteran or the dependent of a veteran, you may be able to receive assistance available through the Post 9/11 GI Bill. Eligible dependents of veterans who are permanently disabled due to a service-related condition or who died while on Active Duty or as a result of a service-related condition may be eligible for education and training opportunities through Survivors and Dependents Assistance.
Comparing offers. If you have multiple offers and want to compare them side by side, the Consumer Financial Protection Bureau has a simple worksheet to help you compare up to 3 schools.
If you don’t understand, ask. This decision could affect your finances for years to come, so it’s worth the time to understand all the details before you send your letter of acceptance. If you’re still confused after reviewing an offer, call your school’s loan officer for an explanation.
If your financial aid package doesn’t stretch far enough to cover what you need, Navy Federal could help you make up the difference with a private student loan.