You're in! Now about that financial aid...

Congratulations, high school senior!  Right now, you’re likely busy making a decision about which of the fantastic college acceptances you want to accept. As you decide what dorms you like, which clubs you’ll join, and which campus environment feels right for you, you’re likely a bit confused about what to make of the financial aid package the college sent you. Perhaps you didn’t get as much aid as you hoped for or maybe you got a generous scholarship but can’t figure out what the real bottom line is going to be. Read on for tips on how to understand your financial aid letters and compare them equally.

Types of Financial Aid Offered

If you’re like most students, your aid offer will likely include a couple different types of assistance. Scholarships, grants, loans, and work-study are all common forms of financial aid and each type offers a different way for you to and your family to cover the costs.


When looking at your financial aid letters, you first want to see how much “free money” the college has offered you. This will be either a need-based grant based on your family’s financial situation or a scholarship based on either academic, artistic, or sometimes athletic (but not for DIII schools!) achievements. Grants and scholarships won’t need to be repaid after you graduate and typically are renewable if your financial situation stays the same or you maintain certain academic performance. It’s important to read the fine print to understand what’s expected of you to keep your scholarships and grants. If you can’t find it, a quick call to the Financial Aid Office will clear it up!

Federal Direct Unsubsidized/Subsidized

 In addition to using grants to cover your financial need, the college is likely using loans to some extent.  We know this can be a scary thing to think about since you’ll eventually need to repay these loans four years later.  Before you blindly accept the loans included on your financial aid letter, you want to make sure you understand just how much debt the college expects you to take on.  The key terms to look for here are “Federal Direct Unsubsidized” or “Federal Direct Subsidized” as these loans refer to the federally backed loans every student is entitled to borrow. For a first-year, first-time college student, the maximum amount you can borrow is $5,500 (this goes up by about $1,000 each year after your first year).  You may have only an Unsubsidized loan, which accrues interest while you’re in college, or a combination of Subsidized and Unsubsidized loans. The subsidized version means it won’t accrue interest until six months after graduation. If these are your only loans included on the letter, they’re not the worst options to consider borrowing as a means of helping yourself cover your costs.

Parent PLUS Loan

One type of loan to watch out for is a Parent PLUS loan.  This is a loan borrowed by your parents and lets a borrower take out up to the full Cost of Attendance for a college. If you’re attending a private college, this could be HUGE if you’re not careful.  This loan also tends to have a higher interest rate than can be found by shopping around for other lenders.  While it can be useful if you don’t have other options and need to cover some remaining cost, some colleges will add it to your award letter to make it look like they’ve met more of your financial need than they have.  As with both student and parents loans, these are best considered as optional aid and you can always refuse them if you don’t want to take on the loans.  Think of it as the college letting you know ALL of your options and not a requirement.  A quick email can have them removed from the aid offer. That said, it’s HIGHLY unlikely that a college will replace these loans with more grants just because you’re choosing not to borrow. 

Federal Work Study (FWS)

 Finally, the third type of financial aid you might see is work-study, sometimes called “Federal Work-Study” or “FWS.”  These funds will show on your financial aid letter but you’ll need to work part-time to receive them in the form of a regular paycheck. This is actually a great form of financial aid because it gives you a feeling of satisfaction that you’re actively working to support your education. At most colleges, the jobs available are actually really great ways to develop valuable skills and learn how to work in a professional setting.  You will want to ask the Financial Aid Office how many hours the average student works to get a feel for how to manage your time. Usually, these types of campus jobs are designed for student schedules and won’t expect you to work more than a part-time schedule. 

What to do next:

Compare Your Offers Side-by-Side

 Now that you understand the different forms your financial aid might take, you’ll want to compare your offers side by side to see which college is offering the lowest out of pocket cost to your family. Keep in mind that every college will define your financial need (Cost of Attendance minus your Expected Family Contribution) differently so focusing on the remaining cost is the key place to look.


We’re big fans of this Compare Aid Calculator from the College Board, which lets you add every detail from your different financial aid letters so you can easily compare four colleges at a time. After you enter all of your details and press “Calculate,” you’ll see the percentage of each award that is grants, loans, and work-study as well as a side by side comparison of your family’s share. 


With this information in hand, you’ll have a much easier time seeing which college is offering the lowest cost and make a more informed decision about what kind of college experience you value most and, therefore, what amount you and your family are comfortable contributing.  Remember, there’s a lot more than just the bottom line to consider.  Take into account the experience at each college and have open conversations as a family to decide what each experience is worth to YOU. 


We know financial aid can seem overwhelming.  If you start early, compare each offer side by side, and have open discussions as a family you’ll have a much easier time deciding which college is the best one to choose. And remember, the reason the widely accepted enrollment deadline is May 1 is to allow time to think clearly and thoughtfully before making this big decision.

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