It’s spring of your child’s high school senior year. Your student has applied to the colleges of his or her choice, filled out all of the financial aid forms, and the decisions have come back. Once the acceptances are in, it’s time to compare the financial aid packages that you’ve received. You may be surprised to find that each school is offering you something quite different in their package. Schools will differ in what they have established as your EFC (Estimated Family Contribution). The make-up of grants to loans to work-study will vary. Loan types will be different. Some schools will cover your full established need. Others will leave you with a “gap” in unmet need. You’ll have many things to analyze, compare, and consider.
What you should look at:
- How much of the award is in grants versus loans?
- What is the ratio of grant aid to self-help aid? Grant aid is aid that you do not have to repay. Self-help aid would include loans, your expected family contribution from your own assets, and work-study.
- What are the terms of the loans in the package? Are they subsidized (i.e. the government picks up interest payments until after you graduate)? Unsubsidized? From private lending sources that are still to be determined by you?
- Has all your need been met or is there a gap? If you have been “gapped,” how big is the unmet need?
- If your child has received a scholarship, is it just for one year, or is it renewable each year?
Like it or not, colleges will use their limited financial aid resources as a tool to entice those students that they want the most to enroll. So, more “desirable” students will receive more favorable aid packages than other admitted students. The “most wanted” students may have their full need met while others are gapped. They also may have a better ratio of grants to loans to work-study with a much greater percentage of non-repayable grants in the mix than other students receiving aid. That means that aid packages will vary tremendously from student to student just as they will from school to school.
One other important thing to know is that once any federal money is awarded in an aid package, the student cannot receive any more money beyond the calculated need. So, for example, if your child receives outside scholarship money, and full need has been met by a financial aid award from a school, the amount of that outside scholarship will be deducted from the school’s original aid package. The student is only allowed to receive enough aid to meet their calculated need irrespective of the sources of that aid.
Understanding what each financial aid award is offering can be a challenge, but it’s important to look closely and compare and contrast so that you can make the best possible decision when it comes to school choice and financing your child’s future.