Congratulations! You’ve been accepted to multiple colleges. Among the admission letters, from each college, you have also received a financial aid award letter detailing the total amount of financial assistance the school will offer to help fund your education. The next step is to Compare School Financial Aid Offers to determine which college is the most affordable. Because financial aid award letters all look different, it can be difficult to compare apples to apples. It may be helpful to familiarize yourself with this Glossary of Terms for Financial Aid Offers provided by NASFAA (National Association of Student Financial Aid Administrators).
Items to consider when comparing costs include the college’s cost of attendance and the amount of awarded financial aid. A college’s cost of attendance includes not only costs billed directly by the school (such as tuition and fees) but also costs indirectly associated with attending college (such as books, travel expenses, and personal expenses). If the cost of attendance is not listed on an award letter, ask the school’s financial aid office for this information. Awarded financial aid might include gift aid (grants and scholarships) as well as self-help aid. Self-help aid may include student loans, which must be repaid, and Federal Work-Study which is money earned through work.
To calculate the net price of each college subtract the number of grants and scholarships from its cost of attendance. It may be helpful to use an online financial aid calculator such as College Covered’s Award Letter Comparison Tool | College Covered or College Board’s Calculate Your Cost – BigFuture | College Board. Also, subtract any savings set aside to pay for college. The remaining amount, if any, will be your out-of-pocket cost to attend college for the year. For any remaining out-of-pocket expenses, consider applying for part-time employment or private scholarships. Such resources can limit the amount of borrowing needed to pay for college.
Pay close attention when calculating the net price. It is important to contact the financial aid office to ask questions if you are uncertain about any parts of your financial aid award. See Federal Student Aid’s Accepting Financial Aid to learn the best order in which to accept financial aid, including details about the differences between Federal Versus Private Loans, Subsidized and Unsubsidized Loans, and PLUS Loans. Once you have a good understanding of your awarded financial aid, follow the directions included in your award letter to accept your aid.
The net price must be recalculated each year because colleges’ cost of attendance and your awarded financial aid can change from year to year. As a general rule, the Consumer Financial Protection Bureau recommends that students limit total student debt to the expected starting annual salary after college graduation. CFPB’s financial aid offer tool, Your financial path to graduation, can assist in estimating how much you will owe when you leave college and whether or not you will be able to afford that debt.