Evaluating, Understanding And Comparing Financial Aid Offers
So you have been accepted at several colleges. You filed your FAFSA and other financial aid forms. You have been waiting for the numbers to arrive and finally they are here. Now what?
You read each offer and see that there is a lot of different information in each. They show the COA and your EFC and somehow they come up with their calculations for your Financial Need. Then they begin listing PELL's, SEOG's, TAP and all these other types of aid. Then Perkins and Stafford, Subsidized and Unsubsidized, PLUS and work-study. WOW - that's a lot of jargon to decipher before you can make your decision on which college.
Simplify and Organize: Lets begin to sort it out.
COA - Cost of Attendance - Each school will give their estimate for total cost for the year. This will include tuition, fees, books, supplies, room and board (if applicable), personal living expenses and transportation.
EFC - Expected Family Contribution - This is the amount that the government has determined, based on your answers to the FAFSA, that your family can afford to contribute to the cost of your education. This number may be higher than you would like to see, the lower the EFC, the more financial aid that the federal, state and college will try to provide to help you meet your financial need. NOTE: This number should be the same for each of the colleges that you are reviewing.
Financial Need - This is the school's COA minus your EFC. This number will probably be different for each school that sends you an offer.
Please Note: In some cases, a private college may not cost you any more that a state school. If your EFC is low enough, and the private school has a generous financial aid package, you may actually be able to go for less than a state school.
Best Financial Aid
The best forms of aid are those that do NOT need to be repaid in any form. These include merit and needs based scholarships, grants (such as PELL and SEOG) and private endowments. Many people will refer to this as "gift aid". I tend to believe that this is smart aid.
You may qualify because you excel in academics, athletics, music or some other area. You may also have been smart enough to restructure your income and assets to effectively lower your EFC which allows you to qualify for more of the best aid. Either way, this is a smart course of action and is rewarded by the system.
Tuition Assistance Programs (TAP) are offered by some states and these are also forms of aid that do not need to be repaid in any way. To qualify you will usually have to complete some state forms in addition to the federal forms.
Good Financial Aid
Good quality aid is aid that requires some effort on your part to repay the support that is provided. This would include Federal Work-Study jobs, low-interest rate Federal Perkin's loans and Federally Subsidized Stafford loans.
These are better than our next category, but there are some strings attached to each one. Work-Study is a job and you actually have to work the job to collect your pay. These are usually pretty basic jobs that do allow for study time if you are not busy.
Perkins and Subsidized Stafford loans are needs based loans. Every dollar borrowed has to be paid back, with interest that starts accumulating after you finish your school. The government pays the interest for you while you are enrolled as a full-time student and the rates are lower on the Perkins than the Stafford.
Worst Financial Aid
The worst type of aid is all other types of loans. Usually they have higher interest rates, interest starts accumulating immediately and continues throughout college.
Unsubsidized Stafford Loans, Parent Loans for Undergraduate Students (PLUS) and private student loans all fall under this category. In some cases this is where the college offers the most aid, and that makes those offers less desirable.
As you can see that there are many variables that will come into play as you evaluate your financial aid offers. Always take a look at the ratio of best aid to the other aid that is offered. The higher the percent of best aid, the better the offer in most cases. If most of the aid offered consists of loans, then you may be better of looking at a different school.
You can also appeal your offer and in most cases, it never hurts to try. If the school that you really want to attend makes an inferior offer, make a formal appeal to see if they can find ways to improve their offer. Just make sure that you use the correct method for appealing your offer.
Your next step is to decide which offer you are going to accept and let that school know that you will be accepting all or part of it. You do not have to accept all of the loans if you can do better elsewhere. Make sure to pay attention to each school's deadline for acceptance. You don't want to miss these, but you can request an extension of time if necessary.
If you would like to discover additional ways to help increase financial aid and reduce college costs, now and in the future, you can download my FREE College Cost Savings Kit by clicking here or visiting my website listed below. For complete details about these and many other strategies that I have personally used with my own five children, consider reading my new book -How To Get Your College Education For Less.
I hope this helps you to better understand your options and make a faster and better decision. Enjoy the rest of your college experience.
Keith Maderer is the father of five college age students and has been a financial, investment and tax adviser in the Western New York area since 1981. He is the author of "How To Get Your College Education For Less". Available on Amazon.com - ISBN No: 978-1-4538-2053-7
To get your FREE College Cost Savings Kit, visit [http://www.CollegeEducationForLess.com]
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