Late March and early April is a happy time for most college applicants. It is when they are notified of their admission and receive Award Letters from the admitting schools. The happiest are those who receive several admissions from which to choose. Some students can afford to simply choose the school they like best. But more often a student needs to compare Award Letters by calculating the real cost of attending each college. The outcome of this comparison determines which college fits them best by all criteria, with cost as the most important factor.
What Is an Award Letter?
Comparing Award Letters can be like comparing an apple, an orange, a pear, and a cumquat. Just as no two colleges are the same, no two Award Letters are the same in terms of how they are presented and what information they include. This is why comparing Award Letters is an essential step in identifying the best-fit school for most admittees.
After a student submits their Free Application for Federal Student Aid (FAFSA), the colleges designated on it are sent a Student Aid Report (SAR). When a student is admitted, a college uses this information to assess eligibility for financial aid. When they have done this, they send an Award Letter to the applicant soon after or with the Letter of Acceptance.
The Award Letter enables a student to determine the real cost of attending the college. It identifies the funds available to the student to help pay the costs of attending the college. Help may include Federal and state grants, college (i.e., institutional) scholarships and grants, work-study programs, and student loans available from government agencies and the college itself. Award Letters are developed for each applicant based on their SAR, the Cost of Attendance (COA) of the college, the student’s academic record, and other factors.
Calculating the Net Cost of Attending Each College
A student should take the following steps to calculate the net COA at each college that has admitted them:
- The COA is included in an Award Letter. It includes amounts paid directly to the school such as tuition, fees, and on-campus room and board. It will also contains reliable estimates of costs such as off-campus housing living expenses, books, supplies, equipment, and transportation.
- The student should subtract grant and scholarship amounts from the COA and the amount of savings and investments that the student and parents plan to pay for the upcoming academic year. The remainder is the net COA(NCOA). Students should be aware that private, non-institutional scholarships that they have been awarded are not included in an Award Letter. Colleges are not even aware of them, but the student should take them into account in determining the NCOA.
- Compare the NCOA’s for all of the colleges to which the student has been admitted. The NCOA is the amount that still needs to be funded by another source such as student loans.
The Role of Student Loans
If there’s still a gap between the total funds available and the COA, U. S. Education Department (ED) loans are a readily available source of funds, but they should be evaluated carefully. Each Federal loan program has different interest rates, fee structures, repayment terms, and options.
Institutional loans from the college itself have different rates, terms, conditions, and options as established by the college. A student may also seek a loan from a private sector financial services companies. In its Award Letter, a college may indicate how much the student is eligible to borrow from a particular private lender, but it won’t include the terms and conditions that would apply to the loan. Private sector loan terms will rarely be as attractive as those offered by the ED or a student’s college.
The ED’s website at Studentaid.gov has a Loan Simulator that can help students calculate loan payments and terms to help them choose the loan that best meets their needs. Students can calculate the ramifications of borrowing different sums of money Use of the Loan Simulators can help identify the best loan repayment plan by considering factors such as the ability pay a loan off ahead of schedule without penalty, to consolidate loans, or to adjust payments to accommodate changes in income level.
Gift Aid and Renewable Aid
The aid in Award Letters is often based on financial need. The Federal Pell Grant, for instance, goes to students with significant financial needs as ascertained by the FAFSA. Federal work-study programs, which allow students to earn a certain amount of money in a part-time job, are also awarded to those with financial need. These are “gift aid” because they don’t need to be paid back.
Award Letters offer aid only for the upcoming academic year. A student may have more years of undergraduate school beyond the next one, but grants, scholarships, loans, and work-study may not be renewable . If they are renewable, students should determine requirements for doing so. For example, a student may need to make “satisfactory academic progress” to remain eligible. This usually means maintaining a 2.0 GPA and completing course requirements on time, although each school is free to establish its own criteria. Failure to comply with program requirements may result in the loss of financial aid.
Students should be aware that some college awards are “front-loaded”. They offer substantial aid in freshman year to induce enrollment, but then reduce aid in future years. Such a reduction, if unexpected, might make student unable to cover costs as a sophomore.
Appealing a College’s Award Letter
If a student aspires to attend a particular college whose award falls short of needs, he or she may unofficially appeal their award and try to get a better one. The student should update their FAFSA with relevant new information and then contact the college’s financial aid office to discuss the situation. The college may be influenced by a recent significant change in financial circumstances such as a parent losing a job or the family suffering a financial setback. Although no college is obligated to take action on a student’s appeal, it can’t hurt to ask.
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