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Five steps to compare multiple financial aid offers

With the cost of some colleges as high as $50,000 per year, many universities (and state and federal governments) offer a variety of financial aid programs to assist families in making their child's choice of college affordable.  Some schools offer grants, scholarships, loans, and work-study programs, and governments offer student loans, parent loans and different types of grant programs.  So if you have applied and been accepted at multiple schools, each school will provide you with a financial aid package to encourage you to enroll at their university.  Each offer may be substantially different.   

To add to the confusion, universities often list their tuition costs in a variety of ways.  Some list tuition costs by credit hour, some by semester, and some by school year.  Some include room and board while some don’t.  Some include books and computer fees.  Others don’t.  And some include transportation and living expenses while others don’t.  So determining the true total “out-of-pocket” cost is often a confusing and complicated process.   

Step 1  In order to compare offers from competing schools, the most important starting point is to visit each school’s web site and search for Tuition Costs (generally listed under Admissions).  Regardless how the fees are listed, break them down into ANNUAL fees for each school by the following categories:

• Tuition

• Room & Board

• Books & Supplies

• Transportation

• Other Fees

Total  

Total the fees in each category, then together, to make sure you compare each offer equally.   

Step 2  Next, review each school’s financial aid offer and subtract the grants and scholarships offered by each school from the above total.  Note that grants and scholarships generally do not require any repayment (although you should read the exact terms of each offer thoroughly).  This amount represents the cost of attendance after any authorized discounts.

Step 3  If your student will be participating in a work-study program, list the dollar amount of work-study that each school has committed to provide.  Be aware that for athletes especially, work-study must be performed outside of normal study requirements and athletic responsibilities.  If the work-study is authorized but the student finds he/she cannot meet its time requirements, the value of the work-study will be charged back to the parents.  The total after work-study represents the amount the family will be required to either pay or finance.    

Step 4  After this amount is calculated, subtract any student loans you may be eligible to receive.  Your financial aid offer will generally include loans made available by the school itself, or through various government programs.  The amount remaining is the true “out-of-pocket” family cost. 

 Step 5  The federal government requires recipients of federal financial aid to complete and file a Free Application for Federal Student Aid (FAFSA) each year to determine exactly how much aid each family is eligible to receive.  After each family provides income and expense details, the FAFSA will determine an amount called the Expected Family Contribution (EFC).  This is the amount of money each family is deemed responsible for providing toward its own college costs.  Deduct your family's EFC from the above “out-of-pocket” cost.  The balance remaining is known as the Gap.  This is the additional difference in costs remaining that parents are responsible for. 

Use these steps to determine what your true out-of-pocket expenses will be for each college you are considering.