5 Easy Steps to Evaluate Financial Aid Offers
It's that time of year again when college acceptance letters and financial aid offers are trickling into students' mailboxes across the Commonwealth. Cost is not the only factor in deciding where a student will attend college, but it is a very important one. No two financial aid offers are alike, and it can be confusing for many families to compare their offers and to understand all of the components of each one. To alleviate this confusion, I have always used MEFA's College Cost Calculator to help families compare and analyze their offers side by side. This year, I went through the exercise with my niece's offers, and the results were eye opening! To use this beneficial tool, I followed these five easy steps:
- List Your Direct Billed Costs: The direct billed costs, such as tuition, fees, room, and board, are the amounts that will be listed on the college bill and charged to the student each semester. The total of the direct billed costs is a good number to review in order to understand what each college is charging. Some colleges include a health insurance fee in those billed charges. You can waive this fee if the student is already insured by a family plan.
- Record Your Gift Aid: Enter the federal, state, and institutional grants and scholarships, called gift aid, that each school has given to the student. The institutional grants and scholarships may be based on merit and/or financial need. Make sure you know the criteria to maintain these grants and scholarships from each college. All scholarships received from outside organizations should be listed as well, and need to be reported to each financial aid office.
- Include Your Self-Help: Self-help is financial aid that the student has to either pay back (student loans) or earn by working (work-study). Work-study funds are an offer of employment, not a guaranteed source of funds, and come to the student as they are earned throughout the academic year. They should therefore not be listed as a source of aid within this calculator (though earnings through this program can be used to pay for miscellaneous costs as they arise). Student loans are listed separately within this calculator for a very good reason: to help students identify the amount of money they will need to repay. It's critical that students understand the cost of borrowing and how their repayment of student loans will be supported by their future career plans.
- Beware of Packaged PLUS: Some colleges will add a Federal Parent PLUS Loan to an offer, but this figure should not be included when comparing offers. Federal PLUS Loans are not defined as financial aid, as they are optional credit-based parent loans and require an application process and approval. While the PLUS Loan is one option for families to pay the bill, and the PLUS Loan does offer certain repayment benefits, it is not the only option available. Families should compare the PLUS Loan with other loan options before borrowing, and remember to take advantage of interest-free monthly payment plans first.
- Review the Bottom Line: The calculator will automatically add up your direct costs and deduct your financial aid to present you the remaining costs due at each college. You'll also notice that the calculator will provide your total grants/scholarships and total loans so you can quickly analyze the components of your financial aid offers and compare them with ease! When making a plan to pay for school, don't forget to budget for the non-billed costs such as books, transportation, and spending money. And remember to use a monthly payment plan, available through the college financial aid or billing office, to minimize borrowing.
Going through these five easy steps with MEFA's College Cost Calculator helped me provide clear facts and guidance to my niece, and I know it can help you as you evaluate your offers. If you get stuck or have any questions while using the tool, call or email us here at MEFA at (800) 449-MEFA (6332) or firstname.lastname@example.org.
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