In the United States, everyone has the right to a free public education, but not a free college education. The Federal government and most colleges agree that students and their parents are the ones most responsible for paying for college.

The philosophy behind financial aid is that everyone should pay what they can out of income and assets (your EFC), and then financial aid, including any outside resources, makes up the difference.  The only way you can pay less than your EFC is if you get so many outside scholarships that they exceed your financial need. This is highly unlikely.

At many colleges a “B” average can put you in the running for merit money.  Sometimes a separate application is required; sometimes your application for admission is enough.  Don’t count yourself out by not applying; apply and let the college decide!

Private colleges give more financial aid than public ones, but their tuition is usually higher as well.  Public colleges award less aid, but taxpayer support keeps their tuition lower.  Since a high-priced college often awards more assistance than a low-priced one, a particular student might end up paying the same out of pocket cost at both, or even less at the college with a higher sticker price.   That’s why you shouldn’t rule out your “dream college” as too expensive until you find out if it wants you and what kind of financial aid package it will give you.

Comparing Award Letters from Colleges

• Aid package-The total amount of all financial aid being offered to a student by a college.
• Award letter-A document that a college sends to a student detailing the financial aid package.  It indicates the type and amount of each scholarship, grant, loan or work-study opportunity being offered.
• Appeal-A request that a college reconsider its financial aid package

It’s best to wait until you have the award letters from all the different colleges that have accepted you before deciding which one to accept.  If you have questions, wait until you’ve gotten answers from all the financial aid offices involved before you decide.

The offers in your award letters will differ.  The amount and type of aid given will vary, and the letters may also differ in format, especially in how they itemize costs.  In weighing the offers, the important thing is to compare apples to apples not oranges to oranges.

“It’s not simply the dollar amount of the grant or scholarship that families should focus on.  They need to lay out, side by side, the full picture.  What’s the cost of attendance, including out-of-pocket expenses?  What’s the family contribution?  What the elements of aid?”  What’s going to happen with loans, with work?”

Don’t be dazzled by a large award.  Instead, look for the bottom line:  your net cost to attend the school.

Loans vs. Grants

All other things being equal, it’s better to receive a grant or scholarship than a loan.  For that reason, a financial aid package with a high percentage of gift aid is more attractive, on the face of it, than one with a high percentage of loans.  But there are circumstances where you might take the award that offers more loans and less gift aid:  for example, if that college is a better fit for you overall.

Do not be surprised if your award includes loans!  Most aid packages contain them.  Loans are optional; you don’t have to take them out.  But if offered as part of a need-based aid package, they can be an excellent way to help finance your education.  The alternative—taking only grant aid and try to pay the costs that the loans would cover out-of-pocket-could put your family under more financial stress than the loan would. 

It’s usually in your best interest to accept subsidized Stafford and Perkins loans that are part of the aid package;  the repayment terms are good and the government pays the interest while you’re in school.  Unsubsidized loans—such as unsubsidized Stafford, PLUS loans, and private loans from a bank—should be studied more carefully to make sure the terms are acceptable. 

Work-study jobs are also optional, but if you’re offered one and you can manage the time, take it.  Having a job on campus brings in income, expands your social networks, allows you to make contacts with professors and administrators, and gives you experience that can improve your resume.

Your decision about which offer to accept should be based not just on cost but on how well the college fits you academically, socially, and personally.

**If you are considering early-decision programs, ask each school’s financial aid officer:  How is financial aid affected if I apply early decision?  The rules of early decision allow you to turn down the college’s acceptance offer it if doesn’t offer you enough financial aid.

Three types of federal loans 

1. Stafford—Loan to students.  May be subsidized (if student demonstrates need) or unsubsidized.  If subsidized, the government pays the interest on the loan while the student is in college.
2. PLUS-A federal loan for parents to cover college costs not met by financial aid.  Not subsidized.
3. Perkins-Subsidized loan to students with exceptional need.  Perkins-loan debt may be forgiven if the borrower enters a career in public service.

Once you have decided which offer to accept, it’s polite to send a note declining the offers of the colleges you’re rejecting.  That way any funds they offered you can be made available to other students.  As for the offer you’re accepting, follow whatever instructions came in the award packet.  If you’re being asked for more information, send it.  Complete any forms that came with the award letter.  Sign the letter and return it by the due date.

How to Stay on Track Financially Once You Are in College

• Reapply for aid every year.
• Maintain your federal eligibility by staying in school the right number of hours and avoiding illegal drugs.
• Keep up your grades.  Don’t let them get derailed by too much time spent on work or other nonacademic activities.
• Declare a major at a suitable time.
• Make a budget and stick to it.
• Be wary of credit cards.
• Save for future expenses.
• Keep an eye out for new sources of outside scholarships.
• Remember that college is worth it!