Comparing College Award Letters

It’s very exciting for students and families to receive their first acceptance letter from a college; a financial aid award letter usually follows shortly. The award letter contains important information about the financial aid package you are offered by the college. Many students apply to ten or more colleges, so it is essential to review carefully and compare awards before you make your final decision.

Award letters typically include the college cost of attendance (COA) and the types of financial aid offered to you -- usually a combination of scholarships, grants, work-study 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 HESC’s financial aid award comparison chart and 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 the money your family is expected to contribute towards the cost of attendance; this figure is used to determine your financial need. The EFC is found on the Student Aid Report (SAR) you received after filing the FAFSA.

Scholarships and grants

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.

Federal Loans

Loans 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 combination of federal loans. A reference chart outlining the differences can be found on HESC.org.

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

Is there unmet need?

Does the award letter clearly state whether the school is able to meet your 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 your family is expected to contribute, how much is left to pay? How will you fill the gap? You may have savings, but will you also need an alternative (private) loan? And, most importantly, will you be able to afford the additional debt usually at higher interest rates?

Monthly payment plans

Most colleges offer interest-free monthly payment plans, For a small application fee, you can spread your payments over 10 or 12 months, depending on the plans the college offers. Contact the student accounts office at the college for details.

Private education loans

Private Education Loans,also known as alternative education loans are offered by private lenders. Borrowing a private loan is a serious financial commitment. Be sure to exhaust all federal loan eligibility before taking a private loan.

If a private loan is needed, student borrowers may secure better terms and pricing by adding a credit worthy cosigner to their application. Compare private loans carefully and 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) gives students and families access to fixed-rate loans that are generally not available in today’s private loan market. 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 03-11