College is an investment. In many cases your education is worth the time and finances that you put into it. It’s important to know exactly what you are paying for.
What am I expected to pay?
Every school that uses federal financial aid funds will provide you with their Estimated Cost of Attendance. This will include:
Tuition and fees
Estimated living expenses (room, board, utilites)
Estimated cost of books and supplies
Estimated personal expenses (transportation, clothing, entertainment)
It is important to consider here what the school will charge you (direct costs) and what you will be purchasing on your own (indirect costs). The school will charge you for tuition, fees, room and board if you live on campus, and less commonly, books and supplies. While the other expenses are estimated in your cost of attendance, you purchase these items on your own. You are already paying for some indirect costs such as clothes and transportations, so these may be easier to work into your college budget.
What is financial aid?
Financial aid is any funding used to pay toward your college expenses. This includes scholarships, grants, loans, work study, and tuition benefits from your employer. These types of aid will all be listed on your Award Letter.
What are the types of financial aid?
Scholarships – Typically based on merit. Scholarships can be awarded based on academic performance, extra curricular activities, or personal traits or characteristics. Scholarships are gift aid, meaning you don’t have to pay these back!
Grants – Another type of gift aid that is typically need based. The information on your FAFSA generally determines grant eligibility.
Work-Study – This is a federal grant that pays wages for eligible students that are employed in work study participating positions. This is gift aid you earn as a paycheck by working at a job. Since you earn these funds in a pay check, do not plan on this grant reducing the amount you pay upfront for college. Consider this grant as applying to personal expenses, or possibly books and supplies.
Loans – Any aid that has the word, loan, in the name will have to be paid back. Avoid loans if you can to reduce debt while completing your degree. If you need loans, as many students do, you may want to take advantage of the federal Stafford program. Always be sure you understand the terms before accepting any loan funds.
Tuition Benefits – In some cases, an employer will offer educational assistance to its employees, or employee dependents. More often than not this will be gift aid. Be sure you understand the explanation of these awards as they typically have conditions involved such as continual employment or successfully completing every class that is paid for with these funds.
How does the Net Price Calculator help?
Schools are required to provide a Net Price Calculator on their website. This is a tool that lets you enter information about your family to receive an estimate of how much you would pay out of pocket to attend the school. This is a great tool to get a quick estimate. Keep in mind that these tools will provide general information. You may be shown a scholarship you qualify to apply for, but are not guaranteed to be awarded. You may also be awarded an external scholarship, from a community organization, which will not be reflected here. The most important feature here is the estimated direct and indirect costs associated with each school.
What do I do with this information?
The savvy student has one question. What will I pay to attend this school? This can be answered in a simple formula. Direct cost – financial aid = amount due to the college.
You find the direct cost from the Net Price Calculator. You can visit your school’s Registrar’s website for a more detailed price catered to you specifically. Your financial aid will be detailed on the Award Letter provided by your school. Remember to include any community based scholarships you have been awarded that your school has not yet listed in your Award Letter.
When you compare schools it is important to note if any of your choices can be financed without loans. You also want to keep in mind which funds are renewable. Freshmen will commonly receive one-time awards. This means that even though your first year is paid for, you want to be prepared to make payments in the years to come.
What if my financial aid isn’t enough?
This is the time that you consider your educational and career goals. Academics should always be your primary consideration. Review your options in education and determine which school will help you in your educational journey. In some cases, this may be a school that does not offer the amount of funding you expected. If it is feasible for your family, you may want to consider additional loans. These can come from a federal Stafford Parent PLUS loan, or a private loan from a bank or credit union. The PLUS loans tend to be more flexible in repayment. Private loans have definite repayment conditions, but in some cases, can feature lower interest rates. You can find comparison information from the Department of Education at http://studentaid.ed.gov/types/loans/federal-vs-private .
While one school may offer more financial aid, it is important to determine how that compares to the cost of the school. If finances are a primary concern, you want to know how much you will pay after all factors have been considered.