Understanding your Financial Aid Award Letter

8 Tips to Determine Net Price and Additional Scholarship Opportunities

College-Bound Seniors: Congratulations on your many acceptances. Now YOU are in the Driver’s Seat. Understanding your options is imperative. When reviewing financial aid awards, the first thing you should do is compare all offers and check your college list in terms of net cost. 

HOW DO YOU CALCULATE NET COST?

Here is my son’s award letter from Stetson University (2018). Let’s use this as an example, reviewing all definitions as well as the financials:

1. DIRECT BILLABLE COST OF ATTENDANCE: The cost of attendance for one year is a crucial starting point when comparing financial aid packages. Direct costs are bills you pay directly to the school, such as tuition, fees, and room and board.
   The Direct Billable Costs to attend Stetson: $61,826

2. FREE MONEY: How much free money a student will receive is also a crucial figure. The keywords to look for on your financial aid letter are the terms “grant” or “scholarship.” These signify the amount of money that doesn’t need to be paid back.
   Stetson Faculty Scholarship: $31,000
   IMPORTANT: Make sure to check whether the grants and scholarships the school offers are renewable every year. The school may have requirements, such as maintaining a certain grade point average.

3. STAFFORD LOANS: A Stafford Loan is a student loan offered to eligible students enrolled in accredited American higher education institutions to help finance their education. Subsidized loans do not incur interest until six months after the student has graduated from college. Unsubsidized loans incur interest while the student is in school, but they are still considered the most affordable.
   Federal Direct Subsidized Loan = $3,500
   Federal Direct Unsubsidized = $2,000

4. INDIRECT COSTS: Indirect costs are estimates based on the typical student and include books and transportation costs.
   Indirect costs to attend Stetson: $4,300

5. NET PRICE: The net price is the cost to attend minus any financial and scholarship aid – but this number will not necessarily be on the letter, so you may need to calculate it independently. Students will pay for the net cost through a combination of loans, work-study, and savings.
   Net Cost to Attend Stetson: $61,826 (Direct Cost) + $4,300 (Indirect Cost) = $66,126
   Total (Sticker) Cost = $66,126 MINUS Financial Aid (Scholarship ($31,000) and Stafford Loan ($5,500) = Net Cost = $29,626.<A couple of important points to note: The Stafford Loan borrowing amount increases every year by approximately $1,000. ALSO: I did not include the unsubsidized loan interest rate in this calculation. Connor was eligible for additional scholarship money to Stetson if he wrote an essay. He was eligible to apply to the Business Honors programs, so his Net Cost to attend Stetson may have decreased had he chosen to go there. NEVER HESITATE TO ASK YOUR ADMISSIONS OFFICER ABOUT WHAT ADDITIONAL MONIES MIGHT BE AVAILABLE. MORE ON THIS LATER!

6. GAPS OR UNMET NEED: Unmet Need is anything you will owe after you’ve received all your scholarships, grants, and loans. Unmet Need is also something that may not be on the financial aid award letter.
   ACCORDING TO THIS FINANCIAL AID AWARD LETTER, WE WOULD OWE $2,123/PER MONTH.
   A payment plan can cover this amount at the institution, or if the student is dependent, a PARENT PLUS LOAN might help fill that gap. REGARDLESS, if there’s a gap there; you’ll want to pay attention to what your options are for payment

7. PARENT PLUS LOANS: Take care to check whether the school includes federal direct Parent PLUS loans – where the parent is the borrower – on the financial aid letter. Parent Plus Loans tend to be more affordable than regular bank loans.

8. NEGOTIATING MORE MONEY: Can you ask for more scholarship money? Assuming you didn’t apply Early Decision, the answer is YES! If you received college acceptances and merit scholarship offers, compare those awards and ask your top choice(s) for additional funding. 
   What is the best way to do this? Write an email to your admissions representative. Tell him or her that School X is your top choice, but you need it to be more affordable. Reinforce why you are an excellent candidate to receive more money, including additional leadership opportunities, academic awards, or any increase in your SAT score or GPA. Give your top choice colleges any reason to award you more merit aid. Also: Share a copy of award letters in which you received more scholarship money from comparable universities (similar academic profile and sticker price. )

BOTTOM LINE: The four years go by quickly, but the student debt does not go away. I can’t stress enough how important it is to consider all offers to determine which school is the best fit academically, socially, and financially.

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