DECODING A FINANCIAL AWARD LETTER can feel a lot like trying to read a letter in a foreign language that you only took in eighth grade. We’ve assembled some tips and warnings to help you translate the loan lingo and grant gobbledygook.
1. COMPARE APPLES TO APPLES.
Look carefully at what each school is giving you in terms of financial aid so you’re comparing apples to apples.
Your financial aid award that’s listed isn’t necessarily all grants. Some of the aid is likely to also be loans, which need to be paid back with interest after you graduate. In general, the more grant aid you can get and the fewer loans you have to take out, the better.
2. LEARN THE ABBREVIATIONS AND ACRONYMS IN ADVANCE.
Your financial award letter will likely come with shortened terminology. A federal Stafford loan (“Fed Staff L”) may be specified as “sub” for subsidized (the interest doesn’t accrue while you’re in college) or “unsubsidized” (the interest DOES accrue while you’re in college).“Self-help aid” is money you’ll need to provide (your parents’ contributions), earn (through work-study) or borrow (loan).
3. MAKE SURE YOU’RE COMPARING THE NET COST AT SCHOOLS.
Although one college may initially have a bigger “sticker price” than another, it’s important to compare the net cost: that is, how much it costs to attend after you get your financial aid. A more expensive school may end up offering more scholarships, making it more affordable in the long run.
4. ASK ABOUT THE FRONT-LOADING OF GRANTS.
Just because you get this award now doesn’t mean you’ll get it every year. If you’re getting a Stafford loan, for example, their limits are lower for freshmen and sophomores, which could make it a lot harder to pay for school your junior and senior years.
5. UNDERSTAND THAT OUTSIDE SCHOLARSHIPS CAN REDUCE YOUR AWARD AMOUNT.
Unfortunately, some schools will reduce your aid if you later get a scholarship from something on your own. If they reduce your loan because you won a grant, that’s great. But if they reduce your grant, it might not be worth your effort to apply for other scholarships. To be sure, ask each school what its policy is for outside scholarships before you take the time to apply for them.
6. RECOGNIZE THAT THE LISTED “WORK-STUDY” INCOME ISN’T A SURE THING.
It’s still on you to find a job among those listed on campus and to work the number of hours listed to earn that income.
7. WATCH OUT FOR “FILLER” AWARDS.
Some schools will include a Parent Plus loan among the awards. It’s not really an award; it’s a suggestion that your parents take out this particular loan. In other words, it’s a somewhat sneaky way of making your financial award look like more than it really is.
8. BE AWARE OF CONDITIONS.
Read the fine print of all your awards, because some have restrictions and conditions. A merit-based grant may require you to maintain a certain GPA each year. An athletic scholarship may cancel your award if you suffer a career-ending injury.
Finally, some good news. The FAFSA (Free Application for Federal Student Aid) is getting a realistic deadline! Where once you couldn’t apply until January, now students can begin filling out the FAFSA on October 1 using previous years’ tax information.
Be sure you understand everything about your award. Don’t be afraid to make a list of questions before calling the school for answers. College may be one of the biggest investments of your life. You deserve to know what you’re getting—and getting into!
