It’s mid-April and all your prospective schools have sent you their admission offers. Before making your final decision, it’s important to compare financial aid packages. A lot of times, it’s hard to tell exactly how much aid you are being offered. To determine which school is giving you the best deal, take the following steps to dissect those tricky financial aid packages.

1. Determine the total cost of attendance.

The cost of attendance (COA) includes tuition, books, travel fees, room and board, and all other school expenses. If all these costs are not already totaled and included in your financial aid letter, you will need to do your own calculation based on information provided on the school’s website. If the college has given you its estimate of your total COA, make sure to deduct any expenses that do not apply to you. For instance, if you plan to live at home, you do not need to pay for room and board. However, you may have expenses that are not included in their summary, such as fuel, car maintenance, parking, or public transit. If your family lives across the country from campus, consider factoring in more money for airfare if you plan on going home over breaks. Every student is different, so think about your personal situation and determine which expenses apply to your total COA. If you’re unsure how to do these calculations, you can learn how to calculate both your total cost of attendance and resulting out-of-pocket costs here.

2. Add up all grants and scholarships.

This is the money that you will not need to pay back (essentially free money for college). If you demonstrated significant financial need on your FAFSA, you may have received a Federal Pell Grant from the government. The maximum award for the 2019–2020 school year is $6,195. Your financial aid letter will detail any state and school grants and scholarships that you have received as well. If it is not mentioned, ask your school’s financial aid office if these grants and scholarships are renewable each year (otherwise your financial aid package will change drastically year-to-year). If you receive a merit-based scholarship for academic achievement, ask if you will need to maintain a minimum GPA to keep it. If you drop below full-time student status, will you lose your scholarships or grant money? If there is any confusion about what you have received, call the school to clarify.

If you have received a private scholarship from an organization other than your school, you are required to tell the financial aid office. If you know that you’ve won a private scholarship before you are applying for financial aid, go ahead and tell each of the schools to which you are applying about the scholarship and the amount. Each school has its own policy for handling private scholarship money. Ideally, the school would deduct the amount of the private scholarship from your loans and not shrink other scholarship and grant amounts, but this may not happen. Though the overall cost of attendance may be less, your financial aid award could shrink enough that your out-of-pocket costs actually increase. Legally, the amount of scholarship and grant money you receive cannot exceed the cost of attendance at your institution.

3. Check for work-study.

If you are eligible based on your FAFSA, the Federal Work-Study Program gives you the option to earn money through a part-time job to help with your expenses. The dollar amount or number of hours listed in your financial aid letter is the maximum you can earn or work during the academic year through your work-study job. Positions are available on and off campus. The goal of the program is to provide you with the opportunity to gain work experience related to your area of study and/or a chance to give back to the surrounding community. However, not all available jobs will fit this description. Work-study jobs can include staffing the school library, working in the mail room, or serving in a dining facility. You will be paid hourly and earn at least federal minimum wage. Your employer or the school’s financial aid office will assign your hours each semester based on your course load and academic progress. Each school has a different method for handling federal work-study. If you have not received any information on the program, contact the school’s financial aid office and ask the following questions:

• Will I be assigned a work-study job or will I be able to choose where I apply?
• Where can I go to find a list of available work-study jobs?
• Where, when, and how do I apply for work-study positions?
• How often will I receive a paycheck and how will I be paid?
• How many hours a week do I need to work to receive my maximum Federal Work-Study award?

Remember: Just because you qualify does not mean you are required to accept your Federal Work-Study Program offer. If you do not think you can handle working part-time while in school, do not compromise your academic success by accepting a job.

4. Determine the net cost of attending school.

Net cost is the out-of-pocket amount that you will actually be paying (with savings, work-study income, and loans) to attend school. It is calculated by subtracting all your scholarship and grant money from the total cost of attendance. The lower the net cost of the school, the better deal you will be getting.

In calculating the net cost for you, some colleges will subtract your loan amounts from the COA along with scholarship and grant money. They may do this to make your offer look more appealing. However, loans will need to be repaid with interest, so they should not be included in your calculation.

5. Make smart decisions about loans.

When you accept a loan from the federal government or from a private lender (e.g., a bank, school, credit union, or state agency), you must pay back the full amount of the loan plus interest. Federal loans are always a better option than private loans because they offer lower interest rates and more flexible payment options. Direct Subsidized Loans and Perkins Loans (should the program be reinstated) are your best options, followed by Direct Unsubsidized Loans, and, if necessary, Direct PLUS Loans and private loans. Always be aware of your loan’s interest rate, when you need to start repayment, and whether you will accrue interest while in school.

• Understand the difference between federal and private loans. Federal loans are insured and backed by the U.S. Department of Education, thus they are the best option for students who need to borrow money to finance their education. Federal loans have lower interest rates, are eligible for loan forgiveness programs and delayed repayment (meaning that you won’t have to begin repaying your loan until you have completed school), and often, you won’t accrue interest while you are attending school. Private loans are given by private entities and almost always have higher interest rates. They don’t qualify for delayed repayment or loan forgiveness, and they require you to begin repayment while you are still in school. You will be solely responsible for paying interest, which will begin to accrue immediately.
• Realize that loans will follow you way past graduation. You must pay back the entirety of a loan and the accrued interest regardless of whether you finish school. You are liable despite any changes in financial circumstance or inability to find a job. By accepting a loan, you are making a legal commitment to pay back your lender. The standard federal loan repayment plan lasts for 10 years, but depending on deferments and forbearance, you could be paying back your loans for much longer.
• Consider your future finances. Students often qualify for more loans than they actually need to supplement other sources of financial aid and pay for their education. Borrow the smallest amount you think will be necessary to get you through the school year. You can always take out more loans in the future if you qualify. Otherwise, you could be stuck five years down the line with loan payments that are much higher than you can afford. In this sense, it is also important to consider what you may be doing as a career in the future. Research what the salaries are like in your field, where you might live and the associated costs, and do the math. If your future career and lifestyle aren’t going to allow you to make your payments on time, consider taking out less money and finding other sources of financial aid.
• Make payments on time. After one missed payment, your loans become delinquent, and after three months of missed payments, you will be reported to three major credit bureaus. This will tank your credit score and negatively affect your future finances and purchasing power. If you miss nine months of payments, your loans will go into default. You lose eligibility for all federal financial aid, your credit score will plummet even more, you could face legal consequences, and collection agencies will ask for immediate payment of the entire unpaid balance of the loan. It is difficult, but not impossible, to recover from default.

6. Negotiate if necessary.

Did you receive a great financial package from one school, but your top choice college did not offer you as much? It’s perfectly acceptable to send a letter or make a phone call to your dream school asking them to match another financial aid offer. Explain why the school is your first choice and how more financial aid would solidify your decision to enroll. If you did not receive an offer from a second school with which to negotiate, don’t fret! You still have options. Financial aid officers want to help students attend their school, so be courteous when calling and asking for help. Explain any financial hardships that you and your family might be experiencing that weren’t accounted for in your FAFSA. Ask if you might qualify for additional scholarships or grants. If you did not receive work-study, ask if there are other on-campus jobs accepting student applicants. It never hurts to ask questions. Hopefully, you’ll find a financial aid officer that is willing to work with you.

Page last updated: 05/2019