Before deciding on a college for next year, families should look at what kind of aid is being offered and the conditions that apply.
What may look like the largest offer might not be the best.
Getting into college is one thing. Figuring out how to pay for it is another.
Price has become a growing consideration among students and parents. Now, financial concerns govern decision-making for nearly 8 in 10 families, according to education lender Sallie Mae, outweighing even academics when choosing a school.
At the same time, most students and their parents pay only a fraction of the total tab, even as college costs continue to rise.
In addition to income and savings, more than 8 in 10 families tap scholarships and grants — money that does not have to be repaid — to help cover costs. More than half of families borrow, with both parents and students taking out loans, Sallie Mae found. (See Sallie Mae’s chart below.)
That’s why so much hinges on the financial aid award letter. However, it can be difficult to understand what that missive means to your bottom line.
To get a better sense of what you’ll pay out of pocket for higher education, here are the do’s and don’ts to deciphering college aid.
Don’t compare apples to oranges
For starters, while it may seem obvious, some schools just cost more than others. Therefore, what may look like the largest offer might not be the best.
Further, not all colleges include both direct and indirect expenses in the total “cost of attendance,” or COA, said Jennifer Satalino, a financial aid expert with Educational Credit Management Corp., a nonprofit dedicated to helping student borrowers.
While most schools outline baseline tuition and fees, some might not include “indirect expenses” such as textbooks, meals and transportation. For each school, list out all the costs, including personal expenses, Satalino said, before deducting grants or scholarships. (This workshop will help)
“You have to look at the net net,” Chany said.
Do differentiate free vs. borrowed money
In most award letters, there are often several financial aid options, including grants, scholarships, work-study opportunities and student loans.
If you’re having trouble telling the difference between gift aid and loans that will need to be repaid, look for terms like “grant,” “scholarship” and “fellowship.” Anything else is most likely a loan, Satalino said.
“If you have questions, ask — don’t make assumptions,” she added.
For the full article click here: https://www.cnbc.com/2020/02/12/heres-how-to-break-down-your-college-financial-aid-award-letter.html