Comparing College Award Letters

It’s very exciting when the first acceptance letter arrives from a college. The months of taking tests, writing essays, completing applications are over and the results of those labors are now arriving.

A financial aid award letter will follow shortly after an acceptance letter. The award letter contains important information about the financial aid package you are offered by the college. Many students apply to 10 or more colleges, so it is essential to review each award carefully and compare it to the others before you make your final decision.

Award letters typically include the college cost of attendance (COA), your family’s expected family contribution (EFC) and the types of financial aid offered to you -- usually a combination of scholarships, grants, and loans. Since there is no standard award letter, and each college uses its own format and terminology, it may be challenging to compare “apples to apples.” So, where do you begin?

Use the financial aid award comparison chart to sort and compare each award package to see how each compares to the others.

Keep these considerations in mind as you review each award:

Cost of Attendance

The COA should include direct costs for tuition, fees, room and board, in addition to projected, indirect costs for books, transportation and personal expenses.

Expected Family Contribution

The EFC is found on the Student Aid Report (SAR) you received after filing the FAFSA.

Scholarships and grants do not have to be repaid

Does your award letter clearly list scholarships and grants? If so, you should know whether the money will be awarded all four years or for a limited time. Must you maintain a certain grade point average to keep the scholarship? If you decide to switch majors, will you be able to keep the award?

Federal Work-Study

Many colleges have jobs on campus for students to work and earn money, usually at minimum wage. Apply for work-study positions as early as possible, since federal work-study funds may be limited.

Loans are funds that must be repaid

If loans are included in your financial aid package, what specific loans are being offered? What are the interest rates? Were you offered more than one federal loan? You may be offered a subsidized Stafford loan, a parent PLUS loan, an unsubsidized Stafford loan, a Perkins loan, or some combination of federal loans. It is important to know the difference. A quick reference chart outlining the difference can be found on HESC’s Web site.

You can accept the federal loans on the award letter, but you may decline them later when you are invoiced. It is more difficult to decline them on the award letter only to find you need them to help pay your invoice later.

Is there unmet need?

Does the award letter clearly state whether the school is able to award your full need? If it is offering you full need, is most of the money in the form of scholarships and grants or loans and work-study? How much of the money must be repaid?

After totaling the financial aid, and the amount, if any, your family will contribute, how much is left to pay? How will you fill the gap? You may have some money in savings to use, but if not, will you turn to an alternative (private) loan? And, most importantly, will you be able to afford the additional debt you will incur by taking a private loan, usually at higher interest?

Private education loans

Also known as alternative education loans, these help bridge the gap between the actual cost of your education and the amount the government lets you borrow. Alternative loans are offered by private lenders. There are no federal forms to complete and eligibility often depends on your credit score. Rates, fees and terms vary, so compare private loans carefully and read the fine print.

Borrowing a private loan is a serious financial commitment. Be sure to exhaust all federal loan eligibility before taking a private loan.

The HESC Student Loan Marketplace

The Student Loan Marketplace is a dynamic, interactive Web site that lets students who’ve exhausted their federal and state financial aid learn about and compare private education loans with reliable and personalized pricing.

If a private loan is needed, student borrowers may secure better terms and pricing by adding a credit worthy cosigner to their application. Always check the interest rate, fees, interest rate capitalization policy, repayment period, prepayment penalties and other terms and conditions before you sign a promissory note.

The New York Higher Education Loan Program (NYHELPs)

NYHELPs gives students and families a low-cost way to make up the difference between the cost of college and available financial aid. Eligible students with eligible cosigners, eligible parents, or eligible sponsors may be able to borrow up to $10,000 per academic year. NYHELPs requires that students exhaust all State, federal (other than PLUS), and institutional student aid to which they are entitled in order to apply for a loan.

Talk to your family realistically about your “dream” college and those you can actually afford: the key is being open to all the possibilities each college or university can offer at a price you can pay.


Updated: 3/29/2010