College Financial Aid Award Letters

 college funding letterOnce you have submitted an application for financial aid, sometime after (typically early to mid April) you will receive a financial aid award letter from the colleges to which you have applied. This letter gives various details of a proposed financial aid package.

Basically, a financial aid package is a collection of different means of financial aid from various sources. It is supposed to assist you in filling the gap between your EFC (Expected Family Contribution) and the cost of college (COA or Cost Of Attendance).

Once you’ve studied this award letter, the college may ask you to return a signed copy of the letter showing which sources propose you have accepted or rejected. You’re going to see that some of these sources are more desirable than others. You’re likely to reject some and accept others.

However, if you reject one or more of these sources, the college is not going to “make up” the difference you rejected.

Award Letters Problems

There isn’t any standard format for these award letters. And that makes it a bit difficult to interpret and to compare one against the other. Here are some of the more typical problems with these:

Not being very clear in definitions.

An example is the COA (Cost Of Attendance). There are colleges which don’t even include the cost of attendance in the award letter. And all the colleges calculate  the cost of attendance in different ways. Some calculate it  simply by adding tuitions and fees together, excluding room aboard. Others include room and board  along with tuition and fees, but don’t include other costs, for example textbooks and supplies, transportation and personal expenses.

Then there are colleges that itemize all these, and others that just give a flat total figure. Lack of clarity  in identifying all the different award components. It’s not uncommon  to receive an award letter full of undefined abbreviation and acronyms you’ll need to look up.  It’s difficult to distinguish which of these things are loans, what might be grants, in which our work study related.

It is  typical when loans are included for the college not to spell out the terms of the loans! Is also often the case that the loans will appear to be need-based loans being awarded by the college, but they are actually co-branded private student loans not fully described.

Less grants and more loans as you progress.  

It is typical that freshmen will get more grants and, as your student progresses through college to see the balance shift more towards loans than grants.

Part of the reason for this is because the Stafford Loan limits are lower for freshmen and sophomores. Another reason is because of the colleges wanting to minimize the amount of debt of any student who drops out during the first year. So, ask the colleges whether one can expect to receive a similar amount of funds in following years should the family financial circumstances remain the same or very similar.

Gapping. 

Colleges with limited student aid budgets are often not able to meet the full demonstrated financial need of all students. There will be a gap. But, the colleges in this predicament do not bring any particular attention to this gap, often disguising it by including non-need-based aid as part of the package.

Packaging in non-need-based aid.

There are some loans which are available to everybody without regard to financial need. These include the unsubsidized Stafford Loan, the PLUS loan and other private student loans. There are colleges that include these on the award letter so as to ensure that families are aware of these borrowing options. But, they certainly aren’t any part of an actual award.

Specific lenders given on the award letter.

Oftentimes award letters will suggest specific lenders. You’re not required to use any lender recommended by the school.

Outside scholarships.

If you have been awarded an outside scholarship you’re required to tell the college about them. This is federally required. Unfortunately the same regulations require the college to reduce your need-based aid package in the circumstances. You need to ask the college for the pertinent information about their outside scholarship policy.

So, these award letters can be very confusing and, even misleading! When you’re a client of ours we will “hold your hand” throughout this whole process and guide you through clarifying it so as to fully understand what you’re dealing with.

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