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Understanding Financial Aid Awards


You’ve been accepted. Can you afford to attend?

This is a very difficult decision for many families.

Financial aid awards can be tricky and confusing.

Financial need is defined as the difference between the total cost of college minus the expected family contribution, or what they think your student and family can afford to pay.

Cost of Attendance -- what the family is expected to be able to afford (now the Student Aid Index) = financial need

Eg. $85,000 -- $10,000 = $75,000 in identified financial need.

Why are financial awards so confusing?

  • There is no standard award format

  • Some schools don’t list all relevant costs . Starting in 2024 the Dept. of Education is supposed to start regulating the published Cost of Attendance. This does not apply to tuition and fees, but does to all other costs

  • Some list tuition only and do not include room and board

  • Direct costs are billable directly by the college and must include: tuition, fees, room and board.

  • Total Cost of Attendance should also include: books, supplies, travel, personal expenses, health care (if applicable)

  • Each university uses different language to describe what is being offered

  • Many colleges do not clearly identify the students’ total financial obligations

  • Schools have different policies regarding the effect of outside scholarships

What to do?

Call the college financial aid office and ask them to clarify. Make sure you understand all of the terms and what loans are being offered. YOU DO NOT HAVE TO ACCEPT any loan offers. That is completely up to you and depend on a thorough look at your finances.

Distinguish between types financial awards:

  • Scholarships and Grants (actually a discount on college costs, free money doesn't have to be paid back)

  • Federal Pell, California Cal Grants (“free” state/Federal money to help pay for education)

  • Loans (Student, Parent, Federal, College offered) reseaarch loan origination fees, interest rates, and repayment plans

  • Work Study (Usually on campus paid jobs that a student can use to pay expenses) It is up to the student to pursue this opportunity. Usually this money is used for student pocket money.

REMEMBER this is a one-year financial aid offer. Financial aid offers can change if your finances and earnings change substantially. You have to submit new financial aid forms (FAFSA, CSS:Profile) each year. Check with the college to see if this is required of merit only awards. In many cases, the first FAFSA filing is sufficient.

For MERIT aid, usually described as a college scholarship or grant e.g. Presidents Scholarship, University Grant etc. Contact the school to find out:

  • Do grants cover all 4 years, or one-year only (is it recurring)

  • At public universities, will the grant extend to cover more than 4 years of college? (Many public university students now take 4.5 to 6 years to graduate

  • Are there GPA requirements to continue receiving them? If a student's GPA falls below a specified threshold this may take away merit aid

  • Are there requirements associated with the grant e.g. participation in music, theater, sports, enrollment in a particular major etc.

Outside scholarships awarded by private sources can impact financial aid awards. Generally, a college will deduct the value of larger private scholarships from either loans or grants offered. Most outside scholarships, especially larger ones, are paid directly to the college. Colleges limit the amount of aid offered to the identified financial need of the student, the SAI or Student Aid Index. That is the amount of money they calculate you can afford to spend on a single year of college based on what you reported in the financial aid filings of the FAFSA and the CSS:Profile. In other words, a student won’t receive more financial aid than they need to pay for college.

What to do? Here’s a post defining financial aid terms: Financial Definitions Post

If you are still confused, contact me.

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