NEWARK, Del.--(BUSINESS WIRE)--The Oscars are over, but envelope-opening continues in earnest for
college-bound high school seniors who are in the midst of receiving and
reviewing financial aid award letters. Students who complete the Free
Application for Federal Student Aid (FAFSA) receive a financial aid
award letter from each school to which they’ve been accepted. Award
letters include critical information about the cost of college and
available financial aid, but formats, organization, and terminology may
differ, so close comparison is a must.
Sallie Mae, the nation’s saving, planning, and paying for college
company, offers students and families tips to help them understand,
analyze, and evaluate financial aid award letters carefully before
choosing a college.
“In many ways, financial aid award letters are like donuts — they’re
tempting, but the fanciest-looking may not be the tastiest, and it’s a
good idea to know what’s inside before making your choice,” said Martha
Holler, senior vice president, Sallie Mae. “Before you invest personally
and financially in college, it’s worth investing the time to weigh the
pros and cons of each offer, so you can make an informed decision about
which school you do — or ‘do-nut’ — choose.”
Sallie Mae offers these “do’s
and do-nuts” to help students and families compare financial aid
Look for three basic ingredients. Each financial aid award
letter includes the school’s Cost of Attendance (COA) for one year;
the Expected Family Contribution (EFC), an estimate the school uses to
determine financial aid eligibility; and the financial aid offer
itself, which typically consists of “free money,” like scholarships
and grants, as well as federal student loans, which have to be repaid.
List each ingredient in a spreadsheet. Even though the
ingredients are generally the same, the way financial aid components
are organized and how they’re described may differ from school to
school. A spreadsheet makes it easier to weigh the pros and cons of
each offer side by side.
Think about what’s not in the letter. Add campus culture,
location, sports teams, social scene, and other quality-of-life
considerations to the spreadsheet.
The biggest award may not be the best award. Look beyond the
total dollar amount of each award to see how much is gift aid, such as
scholarships and grants, and how much consists of money that will need
to be paid back, like student loans. It may make sense to accept a
smaller award that offers more scholarships and grants than a larger
award that consists mainly of loans.
Calculate the bottom line. Subtract the total financial aid
offer, including federal loans, from the COA. The difference is the
“gap,” the amount that will have to come from savings, income, 529
plans, or other sources of funds to meet college costs. Using a private
student loan, like those offered by Sallie Mae, can be a
responsible way to bridge the financing gap.
Read the fine print. Pay attention to award conditions and
contingencies, and note which parts of the award are renewable and
which are for one year only. Complete and submit required documents
promptly; missing a deadline could jeopardize the award.
Schools generate a new financial aid award letter each year the student
is enrolled. The types and amounts of aid can change from year to year,
so students should submit a FAFSA every year they are in school. The
FAFSA may be submitted beginning Oct. 1 each year.
Find more award letter “do’s and do-nuts” at SallieMae.com/awardletters
and in Sallie Mae’s “How
to Read Your Financial Aid Award Letter” video.
Additional information about saving, planning, and paying for college is
available at SallieMae.com.
Sallie Mae (Nasdaq: SLM) is the nation’s saving, planning, and
paying for college company. Whether college is a long way off or just
around the corner, Sallie Mae offers products that promote responsible
personal finance, including private education loans, Upromise rewards,
scholarship search, college financial planning tools, and online retail
banking. Learn more at SallieMae.com.
Commonly known as Sallie Mae, SLM Corporation and its subsidiaries are
not sponsored by or agencies of the United States of America.