College Life

Comparing Financial Aid Award Letters: Numbers to Check

Let’s say College A offers your student $15,000 in financial aid and College B only offers $12,000. That should make College A the better choice, right?

Not necessarily! College A’s award may be primarily loans, which your student is responsible for paying back. On the other hand, College B’s could be offering mostly scholarships and grants. In this situation, College B is actually the more affordable choice. That’s why it’s important to compare all the numbers before deciding on a college.

Cost of Attendance is the overall price of a school.

The Cost of Attendance (COA) is made up of tuition, fees and the living expenses associated with going to college. However, not all award letters include it. If they do, items like books, room and board, equipment or transportation may be missing. If you aren’t sure what’s included, you’ll need to contact the financial aid office to get the full picture. Keep in mind, the COA may change based on whether your student lives on or off campus, their major and the number of classes they take.

Note that the Expected Family Contribution (EFC) stays the same for each school. This is the amount the federal government assumes your family can pay based on the information you listed on the FAFSA. While most students do receive financial support from their parents, it’s a personal decision if and how much you contribute.

Compare the “free money” offered by each school.

You’ll be happy to know, there is such a thing as free money! Also known as gift aid, it includes any grants or scholarships your student will receive. While the amount varies by school, financial need and SAT/ACT scores are also factors. Work-study is also awarded in this section. Similar to a regular job, students work part-time on campus and earn a regular paycheck throughout the semester.

You may also see the term Out of Pocket Expense, which is the difference between the COA and the free money your student will receive.

Federal student loans vary by school.

While federal loans do need to be repaid after a student graduates, they usually have the lowest interest rates you’ll find. There’s two types of federal loans available: subsidized and unsubsidized. On a subsidized loan, the government pays the interest while a student is in school. With an unsubsidized loan, interest accrues at disbursement. For either loan, payments are not required while a student is in school at least half-time and there is a 6 month grace period following graduation.

Parents can also apply for a Parent PLUS loan if your student is a dependent. However, the parent is responsible for repayment and it is usually nontransferable to the student.

Look at the Net Cost.

This is the difference between the Cost of Attendance and your student’s financial aid package. If there’s a balance due, then additional financing may be needed. That’s where an iHELP Private Student Loan comes into play. Payments are never required while a student is in school at least part-time, although we do recommend making interest-only payments to lower the overall cost of the loan. Plus, we’ve got flexible repayment options including temporary deferment and forbearance options for those who qualify. Remember to always maximize your federal financial aid before applying for a private student loan.

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