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So What's It Gonna Cost?

March 18, 2019

 

 

College acceptances are winging their way towards anxious students as you read this. These acceptances will come with a financial aid package. Long story short – the college is offering you money.  Short story long (and this is the version you need to know about) – the college is offering you a variety of awards, loans, and work study opportunities meant to help you pay for attendance.   Sometimes these award letters are tough to make sense of.  And if you are trying to compare one offer to another, your head may explode. 

So,in order to keep your head intact, here is some information we believe will help you to clarify what a college is offering and how it compares to what other schools might offer.
 
First, some definitions:

COA:  cost of attendance – This is the amount of money it costs (before financial aid) to attend the college.  When trying to establish this amount, be sure to include tuition, room and board, books, insurance, travel and spending money.  Some schools include all of these items in their COA, some don’t.  To make your comparison accurate, make sure you are comparing Fujis to Fujis.
 
Scholarships and grants:  Free money!  Yes, these are sums of money that do not have to be paid back! These can be offered by the college itself or by a state or federal program.
 
Loans:  These are sums of money that must be paid back with interest.  The terms of the loans (interest rate, length of time to pay back, and whether there is any kind of government subsidy to lessen the load) will vary widely.   That’s why it’s essential to read the offer letter carefully to be sure you understand the impact of the potential debt, while your student is in college and after graduation.
 
Work/study: Some colleges guarantee students jobs (usually on campus) to help pay for their education.  The amounts earned can definitely help defray costs for books and smaller items.  Be sure you have clarity on the amount of time that the student will be required to commit.
 
Conditions:  Somewhere in the letter (check the fine print) you will get information on whether or not the package is renewable for each year.  If it is, the renewal may depend on the student maintaining a particular grade point average.  Check this out before you tell your kid that college grades don’t matter. It’s best to look at scholarships and grants first, especially if you are hoping not to take out any loans.  Once you see where you land after subtracting the free money from the COA, you can evaluate the terms of the loans and the impact they would have on both parents’ and students’ ultimate debt load. We suggest you use a tool like the one found here to do the comparison.  If you are a total nerd and like to make your own spreadsheets, we’re impressed, go for it.
 
When in doubt about anything in the award letter, don’t assume.  Call the school’s financial aid office and ask… and ask… until you get the info you need.
 
If you’re unclear on the impact of loans on your day to day finances and whether they make sense for your family, it would be a good idea to consult your accountant to get some guidance.
 
This exercise in comparison is necessary if for no other reason than to be sure you aren’t paying more than you have to.  Most people assume a state school will be the cheapest route.  But if you subtract financial aid from the COA of a private school, you may find the private school is almost the same, or in some cases, less!   This is essential information – sending a kid off to a large state school when they might be far more successful in a small liberal arts college is not something you really want to do.  Especially if the small school is affordable!
 
A word about appeals.  It’s possible your financial situation changed after you submitted your applications.  Or, in spite of a college’s generosity, their offer doesn’t help enough to make the school affordable for your family.   Your child can write to the financial aid department and ask for the award to be reconsidered. If the student can honestly say that they have received higher awards from other schools but very much want to attend this one, they should say it. (We all want to be liked, don’t we?)
 

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