How to Decipher Financial Aid Letters
Congratulations, hail! If you received a letter of financial assistance from a prospective undergraduate or graduate program, it means you have completed the FAFSA correctly – no easy feat – and you are well on your way to making your dreams come true. But before you sign up for the dotted line, here’s what you need to know about these financial aid letters.
First, make sure you know the total cost of the visit, not just the tuition fees. According to FindAid.org , “Some colleges do not even include the cost of attendance in their awards letter. Others include only tuition and fees, but exclude room and board ”and“ some detail all the major components, while others give only one general figure ”. You may need to do a little detective work to sort things out and make comprehensive comparisons.
Then, figure out what they actually offer you.
“They usually bundle it all up into one financial aid section, but you have to understand what you are getting,” says Charlie Javis, founder and CEO of FRANK , a site that helps students get financial aid. For example, merit benefit and federal grants for continuing education do not need to be repaid, while loans obviously do come back.
There is also a difference between subsidized and unsubsidized that you should consider before accepting it: in the case of subsidized loans, the Department of Education pays interest while you are in school and for six months thereafter; in the case of unsubsidized loans, you are responsible for paying interest at all times. Subsidized loans are based on financial needs, while unsubsidized loans are not.
In addition, the letter may not spell out all the terms and conditions of the loans offered, so you will need more information about this: interest rates, fees, years to maturity, grace period, subsidized or unsubsidized interest, etc.
You can negotiate
And know that you don’t have to accept all the help offered. Be especially wary of Parent PLUS loans, which don’t have as many forgiveness and refinancing options as other types of federal loans. How you notify the school about the help you are accepting depends on the school. “In some schools you have to cross it out, in others you have stricter policies, in others you just change online through your student portal,” says Javis.
For example, the following school asks students to cross out what they don’t want (screenshot courtesy of Javice):
In the same letter, you are asked to tick “accept” or “reject”:
You also need to know when you need help. In one semester? Both? All four years? An offer of help this year does not mean that you will receive the same offer next year.
“Just because you have a scholarship this year doesn’t mean you’re going to get it next year, so you need to take that into account,” says Javis. “It’s a really sad reality, many schools don’t tell you what you’re going to get there on a full-time basis.”
And if you do not have enough funds, you can appeal this decision to the help desk, especially if there have been significant changes in your life since the application was filed, for example, you have significant medical debt or you received a similar offer from another school.
If this is the case, you’ll want to resubmit your letter by June 1, Javis says, because schools will have made most of their decisions by then. “Schools are not against you, they are ready to work with you,” she says. So make sure you know what you’re getting and try to get the best deal possible. A little extra work now can save you in the long run.