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How To Decode a Financial Aid Award Letter

Tuition money piggy bank

I was recently invited to contribute to‘s “advisors” pages, by which professional advisors share their expertise.  My first post, entitled “How to Decipher a Financial Aid Letter,” went live yesterday.

Here’s a quick excerpt:

The first step for families trying to assess financial aid packages from different schools is to separate “family money” from “other people’s money.” This process helps focus the mind and the budget on forms of financial aid that truly reduce the overall cost of a college education.

Cost of Attendance

Each college provides a total Cost of Attendance — the educational equivalent of the manufacturer’s suggested retail price. The COA includes tuition, fees, room, board, and a travel allowance. And a bit of spending money that is somewhat randomly determined by the director of financial aid.

Generally, I find these estimates a bit low. So I encourage families to think about these variable expenditures things like travel, pizza, cell phones, and dorm furnishings. And come up with a more realistic figure. Then I put these figures into a spreadsheet so that we can see how the starting price tags of similar colleges can vary widely.

Then we tally up the “other people’s money” in the financial aid letter — grants and scholarships with no strings attached. OPM reduces the bottom-line cost of a college education.

Throughout the college selection and application process, I like to help my families zero in on those schools that will be most generous. Assuming all has gone well, a good student may receive 50% or more off the price of tuition. That can be a good chunk of change.

Happy reading!
Mark Montgomery
Educational Consultant


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