Money. Money. Money. If you are anything like me right now, that should have caught your attention. For most individuals in the college admission process, cost can be one of the most important factors in making a smart and responsible college decision. If a college has accepted you, they should have also sent or will be sending you a financial aid award letter showing the total amount of money you are receiving in aid. If you have not received an acceptance letter yet, do not be sad. Simply bookmark this article. If you have received an acceptance letter, then look for your financial aid award letter in the mail, or your email inbox, or on an online portal.
Your financial aid award letter allows you to see how much your total cost will be (in direct payments and future payments, if you have loans) and compare your colleges. Colleges rarely use the same format when they send financial aid award letters so this is where it can get a bit tricky. If you are trying to understand your letters in a better light, you will want to break it down into three categories. This way you will be able to compare your financial aid packages in the best way possible. The three categories include:
- Grants/Scholarships = Money you do not have to pay back
- Loans = Money you have to pay back after you graduate
- Work Study = An on-campus job set up through the financial aid office that allows you to earn money while in school (most colleges will pay that money directly to you, but a few will apply it straight to your tuition bill)
After you break down your financial aid package into these three categories, you can compare what your colleges are offering and how much the cost will impact you overall. Please, be cautious and do not become fooled by loans that look like free money.
Another good thing to take note of is, tuition, room, and board (room & board = housing and meal plan) charges are not the only costs of college. They are the only things you are directly billed for. (You can see where this is going.) You will, of course, have many college-related expenses that you aren’t billed for, such as textbooks, dorm room decorations, travel expenses, personal expenses, and the list goes on and on. That is why it is important to distinguish between “Cost of Attendance” and “Tuition & Fees.” If a college shows “Cost of Attendance,” the cost estimates for all the college-related expenses I just listed above. If they just list “Tuition & Fees,” then you will want to research how much the college-related expenses will cost you and your family.
Lastly, if your dream school happens to be a bit too expensive for you, there is always the possibility of loans. There are 3 types of loans:
- Subsidized = Student loan. The government pays your interest while you’re in school so you won’t have to worry about interest building up until after you graduate. You are not required to start paying it back until 6 months after you graduate.
- Unsubsidized = Student loan. The loan starts accruing interest right when you take it out. You are not required to start paying it back until 6 months after you graduate.
- PLUS loan = Parent loan. It starts accruing interest right when you take it out, and payments are due while the student is attending school.(Subsidized and Unsubsidized loans are in the student’s name, but that does not mean other people/family members cannot make payments on the student’s behalf. If your family wants to help you make payments on those, later on, they can.)
On a final note, understanding your financial aid award letter is crucial and is why I advise that you overlook it with your parents in depth. If you have any lingering questions, I highly suggest that you contact your institution’s financial aid office and ask away. Recall that there are no stupid questions. The only bad questions that exist in this world are the ones that are not asked.