7 Tips for Navigating Financial Aid Award Letters
Understanding and deciphering financial aid award letters is crucial for aspiring college students and their families when navigating the costs associated with higher education. Award letters outline the financial aid package offered by a college or university. These letters are often filled with intricate financial terms and unconventional abbreviations. To unravel financial aid award letters effectively, consider the following tips:
1. Apply for Financial Aid:
To qualify for federal student aid, including federal scholarships, grants, work-study programs and student loans, completing the Free Application for Federal Student Aid (FAFSA) is mandatory. You must submit the FAFSA each year to qualify for financial aid. Filling out the CSS Profile gives access to private student aid from many universities and scholarship programs.
2. Apply Early:
Filing the FAFSA and the CSS Profile earlier can mean more money for college, as some federal, state, and institutional aid is given out on a first-come, first-served basis. These forms are typically available by October 1st for the following school year. However, this year the FAFSA is set to be available by December 31st, due to a revamped form.
3. Understand the Lingo:
There are several types of financial aid offered, including grants, scholarships, work-study programs, and loans. Grants and scholarships are usually “free money” that doesn’t need to be repaid, while loans require repayment. The term “award” does not necessarily mean free money. The “award amount” is usually a combination of loans and gift aid. Look over the award letter carefully to find the part that includes loans. Look for notations like “L” or “LN” that indicate loans.
4. Learn the Formula:
Break down the financial aid offer into components, distinguishing between money that needs to be repaid (loans) and money that is a gift (scholarships and grants). To see what you truly owe, you’ll need to have the cost of attendance (COA) minus any gift aid (scholarships & grants) and you’ll end up with the out-of-pocket cost (net cost). The following formula helps to illustrate:
Cost of Attendance – Gift Aid = Out-of-Pocket Cost
5. Learn the Format:
Learn how to read award letters and familiarize yourself with examples of them to make comparing easier. Sample letters give you an idea of what to expect, but there isn’t a designated outline for them across the board. There are many examples of letters online that mirror real-world offers.
6. Use Online Tools:
Remember that each financial award letter may vary, so it’s important to compare offers from different institutions to make an informed decision about where to attend. Take advantage of online tools, such as comparison tools provided by organizations like the Consumer Financial Protection Bureau. These tools can simplify the process of comparing financial aid offers.
7. Become the Negotiator:
Don’t be afraid to appeal your award with colleges, especially with private schools that may have more flexibility in their funds. If you receive a better offer from another school, communicate that to your preferred school and inquire about a reevaluation of your financial aid package. While public schools may be less flexible, it’s not impossible to get adjustments made.
Understanding and navigating financial aid award letters is key for making informed decisions about college expenses. By breaking down the components, you can gain a clearer understanding of your financial obligations and potentially improve your financial aid package.
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If you are looking for guidance with understanding your financial aid award letters, or need help starting your family’s college financial plan, reach out and schedule a complimentary consultation with us, today!
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