Comparing College Student Loan and Financial Aid Offers

Published on: Sat, Dec 19, 2009

Financial aid award letters from the colleges where you had applied and been accepted. Now there are several different financial aid offerings. So the question is that how to know that which school package is right for you and what the terms in that package meant? Which package is better than another for you?

Features included in financial aid award letters

Here are the main features that are mostly included in college financial aid award letters:

Cost of Attendance
Expected Family Contribution (EFC)
Federal Grants
Subsidized federal loan offer
Unsubsidized federal loan offer
Institutional grants and scholarships
Unmet need

Learn and try to understand each of these award letter features and compare them.

Cost of Attendance (COA)

College award letter will always give you an exact figure of the cost to attend the college. It is not cost of tuition. Cost of Attendance (COA) is comprised of following features:

Tuition
Room & board
Estimated cost for books
Student activity fee
Any other fees required for attendance

All these items will be crystal clear and will show you exact expenses for studying to a particular college or university.

Expected Family Contribution

Government basically determines the EFC to your family that they will cover financially a part of your college expenses. This figure was disclosed on the SAR following your FAFSA submission. But most of time college award letters itemize it as part of financial aid package.

Federal Grants

If you are qualified for the Federal Pell Grant, the amount for which you will qualify will be indicated in your award letter. That amount indicated in your award letter is the amount, which you don’t have to repay. Anyhow Pell Grant Funds are only for the most financially needy students.

Federal Loan and Work Study Offers

Possibly included in federal loans are subsidized Stafford Loans, unsubsidized Stafford Loans, and Perkins Loans. Parents might be approved for a Parent Plus Loan.

Be aware of that you can be approved for a combination of these loans in varying amounts. For instance subsidized Stafford Loans are need-based, that means you can qualify on basis of a certain level of need, if you qualified for that then you might be approved for unsubsidized Stafford loan funds as well.

Perkins Loans do not come directly from federal government; these loans are campus-based aid. If you are offered Perkins Loan then just realize that these funds are available on a first come, first served basis. So you have to deicide quickly to tap into this low cost loan.

Work Study offers mean that the government had approved your financial position for part time, so that you can earn money to pay for your education.

Institutional Grants and Scholarships

Many colleges and universities announce attractive offers for students. Such as grants for needy students and scholarships are awarded based on academics, athletics, minority status, intended field of study etc. Grant money and scholarships from colleges and universities are the free money.

Unmet Need

Unmet Need is an important figure on your award letter. When the above components are itemized most college and universities indicate what dollar figure is still short of meeting the financial bottom line. Are you having any financial options that will help you to overcome the unmet need, if necessary?

Comparing the Components

Mainly every award letter you receive will likely itemize these financial components and none will be the same.

Determine two final things: one the award letter which offers you the most affordable option and two is that will that affordable offer is from the college of your choice

Some necessary things are considerable:

Always consider first offers with higher grant and scholarship offers because that is the free money and you don’t have to pay back.
Subsidized Federal loans are always better than unsubsidized because the federal government pays the interest that accrues while you are in college.
If the offer is with significant unmet need then always keep these questions in mind that can you afford the cost of private student loan? If you can then is it worth final cost of a private loan Or you like to choose that school that meets your full need.
Compare short and long term costs
Compare short and long term costs carefully because the school meets your full need based on federal loans may ultimately cost you more money in the long term, than a school that offers significant grant or scholarships some are renewable, but contingent upon GPA and other requirements.

While you are comparing college award letters then you must account for any long-term interest rates attached to particular loans. Carefully understand all the terms of the institutional grants and scholarships because some are renewable, but dependent upon GPA and other requirements.

When you find out the distinct financial differences then you will be in best position to make a such decision which wont give you any problem in future. But most important thing is that Compare carefully.